Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Oral Answers to Questions — SOCIAL SECURITY

The Secretary of State was asked—

Child Support Agency (Poverty)

Mr. Chris Pond: What assessment he has made of the likely impact of the reform of the Child Support Agency on child poverty. [98745]

Fiona Mactaggart: What assessment he has made of the impact of the planned reform of the Child Support Agency on the income of the poorest lone parents. [99069]

The Secretary of State for Social Security (Mr. Alistair Darling): More than 1 million children will benefit from the reforms. More non-resident parents will support their children. A total of 600,000 children in the poorest families will gain more than £150 million a year because parents will be able to keep an extra £10 a week.

Mr. Pond: I thank my right hon. Friend for that answer. Does he agree that the maintenance disregard on

working families tax credit provides a positive incentive for both parents to co-operate fully with the CSA? Non-resident parents will see that every penny they provide in maintenance will go to the child, and not a penny to the Treasury, while parents with care will see that the money will be of total benefit to them. Is not that one of the major factors in ensuring that CSA reform contributes to the Government's agenda of eliminating child poverty in two decades?

Mr. Darling: My hon. Friend is right. One of the weaknesses of the previous system was that many parents did not feel that the money that they paid was going into the hands of the parent with care and, therefore, into the hands of the children. We want to ensure that far more children gain. We introduced the disregard so that parents on income support can keep up to £10 a week, which will make a big difference to their children. As he says, it will go a long way towards our objective of eradicating child poverty within 20 years and halving it within 10.

Fiona Mactaggart: Is my right hon. Friend aware that one in three children are in poverty and that, of those, many are likely to be children of separated parents? Will he ensure that, under the new system, the delay in deciding the award for children will be ended? At present, 67 per cent. of decisions are not made within the 22-week target. What will the target be under the new system?

Mr. Darling: My hon. Friend makes two good points. First, of 1.5 million children on the CSA's books, only 300,000 are directly seeing the benefit of child support. Secondly, she is right to say that the children who live in families that have broken up are more likely to be poor.
The advantage of the new system, whereby we will require some three to four pieces of information, rather than nearly 100, will mean that the maintenance calculation can be made within days of an application, rather than within months, or sometimes years under the


present system. Not only will 1 million children gain from that, but far more children will see what is due to them far more quickly than ever before.

Mr. Edward Leigh: Is the Secretary of State convinced that child poverty will be relieved by his reform, which will result in absent fathers who do not pay being criminalised? The taxpayer will have to pay twice: to keep absent fathers in prison and for the children. Would it not have been better for the Government to proceed along the excellent lines suggested by the Woolf report and replace criminal with civil remedies in this difficult area?

Mr. Darling: The hon. Gentleman should be aware that the agency will try every possible means to ensure that fathers who will not pay do pay. A variety of sanctions can be brought to bear against a parent who will not pay. For example, if a parent enters into an agreement to look after the children and breaks it, the CSA will immediately attach that person's wages so that it can get that money into payment. Clearly, if all else fails and a parent will not co-operate, criminal sanctions might have to be brought against that person.
The problem is twofold. First, the system is complicated. Many people who want to look after their children are unable to do so because of all the red tape and bureaucracy involved. We are resolving that through the simpler formula. Secondly, a minority of fathers can pay but will not pay. That is why we are being far tougher on them. If necessary, we will take criminal sanctions against them. I would have thought that most people would support that objective. When someone who can perfectly well afford to pay for their children does not do so, that person should be made to pay in whatever way is appropriate.

Mr. Patrick Nicholls: Does the right hon. Gentleman agree that it must be in the interests of both the paying and receiving parent that the system works efficiently? Is his experience in constituency surgeries the same as mine—namely, that the CSA is woefully inadequate and gets the most basic calculations wrong? People who come to see us give a litany, which is always the same, of telephone calls that are not answered and letters that are not adequate. Does he agree that, in the end, the reforms will stand or fall on whether the CSA provides a service that does justice to both parents?
We know—the right hon. Gentleman is about to remind me—that the system was set up under a Conservative Government, but will he move away from that part of his script and agree that, after two and a half years, something rather better is necessary?

Mr. Darling: I did not think that I would ever see the day when I agreed with almost everything that the hon. Gentleman said. However, he misses the point. He sets out the difficulties that the present system has encountered. That is precisely why we are making changes to the CSA. Fundamentally, it does not work because the calculations needed to work out how much is due to a child are so complicated and convoluted that it takes far too long for the payments to be made. That is why we are introducing a simpler formula that can be easily calculated. The ready reckoners are in the back of

the White Paper for anybody who wants to see them. We are making payment easier for those who can pay and want to do so, but we are going to be far tougher on the minority who can pay but will not.

Mr. Eric Pickles: Those ready reckoners do not show the number of people who will lose out under the proposals. Some 350,000 parents will be worse off by an average of £17 a week. How is the right hon. Gentleman going to tackle child poverty in those households that are going to be worse off? The Conservatives are broadly supportive of the Government's attempts to reform the Child Support Agency, but unless the right hon. Gentleman is prepared to address the fundamental flaws in his proposals, we might not be able to support him as readily as we would like.

Mr. Darling: I hope that the Conservatives and others will reflect on the fact that, as a result of the changes that we are making, nearly 1 million children will be better off. Of course some people will be paying more—that is clear from the White Paper proposals—but they will be paying it to their children.

Mr. Pickles: Parents with care will be worse off.

Mr. Darling: The hon. Gentleman says that parents will be worse off. It is a parent's obligation to look after their children. The children will be better off. I remind the children—sorry, the Conservatives—[Interruption.] It is easy to confuse the two. The Tories have to work out which side they are on. I believe that we should be on the side of the children, not on the side of those who can pay but will not.

Ms Sally Keeble: I welcome the changes that my right hon. Friend has set out. Simplifying the system will reduce non-payment and ensure that the problem of child poverty is dealt with. However, I should like him to explain two points. First, how will the income of the self-employed be assessed? That has been a particular problem in my constituency. Secondly, when will existing claimants come into the new system, which people in my constituency have welcomed?

Mr. Darling: My hon. Friend has raised two points. First, we have made it clear that if a self-employed person will not co-operate with the Child Support Agency, we shall take powers to gain access to Inland Revenue records to see what they are saying to the tax authorities. We have all come across constituents who tell us that they are not getting a penny from the absent father, yet they see him driving around town enjoying a good quality of life while the children have to go without the basic necessities of life.
Secondly, my hon. Friend asked when we will switch the existing case load on to the new system. I have made the position clear time and again. I do not want to repeat the mistakes that were made when the Child Support Agency was set up in the early 1990s, when too many cases were put onto an untried system that could not cope. We want to switch the existing cases onto the new system only when we are satisfied that the new CSA can cope. I understand the frustration of those who would like us to proceed faster, but I hope my hon. Friend agrees that if


we repeat the mistakes of the early 1990s, the new system will not succeed. It can succeed if we ensure that it is up and running before we put the new cases on it.

CSA (Reform)

Miss Anne McIntosh: What representations he has received on reform of the CSA; and if he will make a statement. [99060]

Helen Jones: If he will make a statement on his plans to reform the Child Support Agency. [99067]

Helen Jackson: What plans he has for reforming the Child Support Agency. [99076]

The Parliamentary Under-Secretary of State for Social Security (Angela Eagle): There is widespread support for radical changes to the current system. We have received a wide range of views on the detail of the proposals since the White Paper was published in July. New legislation on child support, announced in the Queen's Speech, will address the failures of the current system and put children's rights at the heart of the child support system.

Miss McIntosh: Page 7 of the Green Paper gave a written assurance that
responses will normally be available to the general public unless you specifically ask us to keep your views confidential.
We have now been told that all responses are to be treated as confidential apart from 110 from academic organisations. I gave a written submission, as did 34 Members of Parliament and more than 1,300 members of the public. Have these responses been deemed to be confidential to cover up the overwhelming opposition from the general public to the Green Paper proposals?

Angela Eagle: There was not overwhelming opposition to the basic restructuring of the CSA, although many comments were made on some aspects of it. Some responses have not been made public because they would disclose individual circumstances which it would be unfair to place in the public domain without the say-so of both parents involved.

Helen Jones: What steps will be taken under the new proposals to deal with absent parents who either refuse to co-operate with the CSA or give deliberately misleading information to the organisation, ensuring, in many cases, that parents with care have a long wait before they receive any money while others play the system to their own advantage?

Angela Eagle: One of the basic points about the new system is that in place of more than 100 different facts about the non-resident parent, three or four facts will be all that is needed to calculate maintenance. Non-resident parents can have a good idea of their liabilities if they have a calculator. We will have simpler assessments which will be made much faster. If the non-resident parent refuses to pay, deduction of earnings orders can be

introduced. If the parent provides misleading or false information, that will be a criminal offence—for the first time—and subject to penalties of up to £1,000.

Helen Jackson: Has not the bungled way in which the CSA was introduced meant that, far from children being put first, there has been increased acrimony so that shared care arrangements have been jeopardised and sometimes have fallen down as a result of the CSA? Will the Minister assure me that shared care arrangements will be brought into the reckoning in the new reforms, and that a fair way will be found to balance financial obligations and care arrangements in the interests of children?

Angela Eagle: My hon. Friend and I could spend all day talking about the many things that have been wrong in the practice of the CSA and in the legislation that set it up. I believe sincerely that the reforms will do much to take away the acrimony. I hope that my hon. Friend welcomes the fact that we wish to encourage the sharing of care by increasing the allowance made in the maintenance assessment for time spent with the child by the non-resident parent. We hope that this will encourage estranged parents to work together, rather than using the agency as a further attempt to pursue their own vendettas against each other, and to put the child and his or her welfare at the centre of their thoughts.

Mrs. Virginia Bottomley: If the Minister is so keen to reduce acrimony between parents and to encourage shared care and shared financing, and as the Government are so keen to proclaim joined-up government, why are the Government delaying the implementation of part II of the Family Law Act 1996? What discussions is she having with the Lord Chancellor's Department on that matter?

Angela Eagle: The right hon. Lady has been in the House long enough to know that that is a matter for the Lord Chancellor's Department.

Mr. David Willetts: Could I invite the Minister to correct the Secretary of State, who seems to have got the wrong end of the stick? Will she confirm that about 350,000 parents with care, whose non-resident parent is in paid work, would have a lower maintenance assessment as a result of the new child support rates, and that the average reduction would be about £17 a week? Just to help her, that was in a written answer that she gave to the House only three weeks ago. Does not that reveal that my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles) was correct? How is that fact compatible with the Government's rhetoric on child poverty?

Angela Eagle: I wish that the Opposition would stop trying to play one parent off against the other by talking about gainers and losers. The people who will gain from the proposals will be the children. The hon. Gentleman's analysis of my parliamentary answer would be absolutely accurate if 100 per cent. of people were paying maintenance. However, as my right hon. Friend the Secretary of State said, 1.5 million children are on the agency's books, but only 350,000 of those children receive any maintenance at all, and only 100,000 receive


full maintenance payments. The reforms will get maintenance flowing and more children will be better off—everyone will gain.

Mr. Harry Barnes: Given the inept operations of the Child Support Agency, the continuing problems in the Benefits Agency and the difficulties that the Passport Agency has been through, have the Government considered that the problem may lie with the agency model? Perhaps we should consider getting back to a system in which civil servants and public service provisions are to the fore.

Angela Eagle: I am sure that my hon. Friend would not expect me to comment on the Passport Agency. After all this time, only 20 per cent. of women on income support receive their maintenance. The figure was the same the day before the Child Support Agency was set up. We must consider why the agency's existence has made no difference to the flow of maintenance. I am sure that many right hon. and hon. Members will agree that the formula was too rigid and prescriptive and there was simply too much to do, which is why we have gone for a very basic, simple and easily calculated formula.

Means-tested Benefits

Mr. Julian Brazier: What estimates he has made of the numbers of people receiving means-tested benefits (a) in May 1997 and (b) in May 2001. [99061]

The Parliamentary Under-Secretary of State for Social Security (Mr. Hugh Bayley): We estimate that the number of people in receipt of one or more of the means-tested benefits in May 1997 was about 8 million. We forecast that the number will reduce to about 7.9 million in May 2001, including those receiving the working families tax credit. The reduction reflects the Government's success in enabling people to get off jobseeker's allowance and back into work.

Mr. Brazier: The reply reflects the fact that unemployment is falling at this point in the economic cycle. Does the Minister accept that putting a large number of new people onto a means-tested benefit—the working families tax credit—and putting many of them on a combined tax and benefit withdrawal rate of more than 80 per cent. will in the long run militate against self-help, lead to a loss of self-confidence and encourage dependency?

Mr. Bayley: The hon. Gentleman must be aware that our economic policies have reduced unemployment and increased the total number of people in work by 400,000, to the highest level ever. His comments about the working families tax credit are entirely wrong. It will boost the incomes of 1.5 million families by an average of £24 a week. Come the next general election, the Conservative party will find that its opposition to it will cost it hundreds of thousands of votes.

Mr. Paul Goggins: My hon. Friend will no doubt have been encouraged to learn that over the first two years of this Parliament the number of income support claimants fell by more than 400,000, or more than 750,000 if one includes children and other

dependants. Is not that proof that the Government are not merely talking about defeating poverty but are getting on and doing it?

Mr. Bayley: My hon. Friend makes the point extremely powerfully. The Government have set extremely challenging targets over the long term to reduce poverty. We have made a start and our policies are having the desired effect.

Mr. Steve Webb: Will the Minister reflect on three facts: that pensioners resent being forced to go through a means test simply to get a decent income; that his decision to increase pensions by 75p next April will force thousands more into the means test; and that his policy of a state second pension and stakeholder pension will not touch pensioner incomes for a decade or more? Is it not true that the Government have no policy to reduce pensioner dependence on means tests for a decade to come?

Mr. Bayley: That is absolute nonsense. The Government have policies in the long term to reform the pension system so that so many elderly people—the proportion is one in five at present—do not have to be dependent on means-tested benefits, and we are taking action now to improve the position of pensioners. Our predecessors, the Conservatives, simply increased the pension each year by the rate of inflation. On top of the 75p inflation increase this year, we have provided a £100 winter fuel bonus for all pensioners—that is almost £2 a week extra for each pensioner household.

Mr. Dale Campbell-Savours: Has there been a reduction or increase in the take-up of housing benefit, and how is the review of housing benefit coming on? Are we getting somewhere?

Mr. Bayley: The review of housing benefit is continuing, and I hope that my hon. Friend the Under-Secretary will make an announcement in due course.

Child Support Agency

Mr. Howard Flight: What plans he has to improve the confidence of the public in the handling of individual cases by the CSA; and if he will make a statement. [99062]

The Secretary of State for Social Security (Mr. Alistair Darling): Our plans to reform the child support system were set out in a White Paper on 1 July. The new system will be effective and easily understood, ensuring that maintenance is paid regularly and reliably. The Child Support Agency is also being reformed to provide a service that is better focused on its customers.

Mr. Flight: May I have the Government's assurance that the computer system will be properly tested for the new system, simple though it is, because many of the problems with the existing system have reflected an inadequate and failing computer system? Secondly, will the approach be changed, because the absence of case officers has, in many of the cases I have dealt with, caused mistakes due to clerical error, with no apparent central


responsibility for any one case? The new system may be simpler, but unless its software is efficient and it is administered well, it runs the risk of experiencing many of the same weaknesses as the present arrangements.

Mr. Darling: The hon. Gentleman is right on both counts. The present computer system operated by the CSA is not very good. It was purchased by the previous Government and it should have been a lot better. I can assure him that the new system will not be brought in until we are satisfied that the IT systems can cope and also that the culture in the CSA has changed, because we have to offer a radically different approach. In the meantime, the staff, who still have to cope with a complex system, are making changes.
We have made changes to the decision-making process, so that things can be put right as soon as a mistake is discovered and parents do not have to appeal. In addition, we have introduced more face-to-face interviews for people who want them and more discussion over the telephone, which can sometimes resolve problems. However, I have to tell the House that until the new system is introduced and becomes operational, we have to operate under the existing system. While we will do our best to ensure that it is improved week by week and month by month, some of the problems that we are all familiar with will continue until the new system, which I am determined will work far better, is introduced.

Mrs. Gwyneth Dunwoody: No one doubts the Secretary of State's commitment to making the system work better, and indeed it would be difficult to make it work worse, but is not the hazard involved in the length of time the changeover is taking the fact that many people are in real trouble because they are not receiving assistance from the CSA? I had three cases on Saturday—each one was genuine—and unless some urgent action is taken, many people will not receive assistance. Some people feel that the agency does not investigate when they provide evidence and others are loth to get involved with the CSA because of its apparent incompetence.

Mr. Darling: I understand entirely the point that my hon. Friend makes. She will appreciate that, at the moment, before any calculation can be made, some 100 pieces of information have to be obtained from the non-resident parent. Sometimes that is difficult, and even when the agency gets the information the position can change before the application is processed and the amount due to be paid is calculated. I do not apologise for that; it is simply a matter of fact.
The present system is inherently complex and difficult to operate. As I said to the hon. Member for Arundel and South Downs (Mr. Flight), we are making changes within the agency to improve performance. It was woeful in the past, but it is improving. Unfortunately, the increase in the case load of some 60 per cent in the past few years is putting additional strains on a system that was already creaking.
My hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) said that she wanted change as quickly as possible, and I understand that. Unfortunately, it will take primary legislation before we can make any of the changes, and that will be included in the legislation that will come before the House shortly. As the hon. Member

for Arundel and South Downs said, the changes are dependent on a new IT system, which we are in the process of procuring. However, I repeat that it will help no one, least of all the 1 million children who will gain under the new arrangements, if we rush our fences again. By doing that, we should end up with exactly the same problem, with which we are all too familiar.

Mr. John Bercow: Will the right hon. Gentleman tell us the exact target time in which Child Support Agency staff should return telephone calls to members of the public? Furthermore, according to exactly what criteria will individuals under the new system be able to appeal against decisions under the flat-rate formula?

Mr. Darling: It is made clear to the staff that they should return calls as quickly as possible. I agree with the hon. Gentleman that performance is sometimes not as good as it should be. However, we have put some £28 million more into the agency this year to ensure that we retain some of our best qualified staff and to improve things.
The hon. Gentleman will be aware that earlier this year we introduced a new decision-making and appeals process throughout the social security system, which is now being rolled out across all the agencies. Instead of individuals having to go through a full-scale appeals process, which is what happens at present, under the new arrangements, people on the front line will, for the first time, be able to put matters right when the facts are brought to their attention.

Disability Living Allowance

Mr. David Borrow: If he will make a statement on the progress being made by his Department in improving the accuracy of testing for eligibility for disability living allowance. [99065]

The Parliamentary Under-Secretary of State for Social Security (Mr. Hugh Bayley): We are making progress on work to ensure the correctness and reliability of awards of disability living allowance. We are doing so in consultation with organisations of and for disabled people.

Mr. Borrow: I thank my hon. Friend for that answer. I recognise that there will always be cases in which the decision on eligibility is debatable. However, a number of constituents have sought my help in the past 12 months because of perverse decisions or recommendations by doctors carrying out medicals for DLA eligibility. My concern is that the Department should monitor doctors' performance in carrying out such medical checks. Will my hon. Friend ensure that the number of cases in which perverse decisions are made is reduced, because the unwarranted removal of DLA eligibility creates a great deal of distress and hardship for constituents everywhere?

Mr. Bayley: My hon. Friend makes an important contribution. Let me reassure him and the House that the Government's approach to DLA and other benefits is to change the delivery system so that the decisions are right in the first place, and continue to be right thereafter.
We have made significant changes to the way in which the medical services operate since they were contracted out to Sema just over a year ago. We monitor the performance of medical board incentives and doctors, doctor by doctor. When performance strays from the norm, follow-up management action is taken with the doctor concerned.
We are also introducing more rigorous training for medical services doctors and more rigorous tests before such doctors are employed. I hope that my hon. Friend is reassured that we recognise the problem that he describes and are taking action to deal with it.

Mr. Elfyn Llwyd: But is there not a conflict of interest here? Doctors obviously want to remain on the panel, but if they find in favour of applicants too often they might find themselves off the panel.
I share the experience of the hon. Member for South Ribble (Mr. Borrow). In a recent appeal, a young gentleman suffering from multiple sclerosis was refused DLA because he said that he probably could walk 102 yd, or whatever the silly distance was. The whole system and the forms are weighted against people who suffer from an illness that is partly physical and partly not. Will the Minister urgently consider the need to review the initial forms?

Mr. Bayley: I reassure the House that doctors employed by the Benefits Agency have never been remunerated according to the decisions that they make. Such a system has never existed, and will not exist in the future. Doctors must make the best clinical judgment. There is no pressure on them to err in the claimant's favour, or against the claimant's favour. When we review doctors' performance, through the review that I mentioned in reply to my hon. Friend the Member for South Ribble (Mr. Borrow), management action is triggered as a result of variation from the norm in either direction; discussions about a doctor's clinical practice then take place.

Mr. David Heath: Does not the Minister appreciate the real distress caused to many people with disabilities when they are reassessed despite the manifest difficulties that they have? What proportion of appeals is allowed? Will he give me an absolute assurance that the initial assessment process is not used to reduce the number of benefit recipients to those who are sufficiently articulate or well advised to appeal successfully?

Mr. Bayley: The assessment process was agreed with disabled peoples' organisations, and with those organisations that represent and speak for disabled people. They wanted a self-assessment system. The form used is a long one, but it allows people applying for benefit to put their own views. That is the primary basis on which the award is made.
When this Government took office in 1997, 59 per cent. of appeals were successful. Although the proportion has now fallen to 48 per cent., it is still too high and the Government must go further. We are, however, moving in the right direction, and we are doing so in consultation with bodies that represent disabled people.

Mr. Bob Blizzard: Does my hon. Friend agree that the disability benefits system works better when

disabled claimants understand it more clearly? Will he join me in paying tribute to the work of local disability information and advice line organisations, which provide advice to disabled people?
The Government have introduced much excellent legislation on behalf of disabled people, and have changed the benefits system for the better. Will my hon. Friend consider working with local organisations to set up or support information seminars? Such seminars, which would have to be held in more than one locality in a region, would help disabled people to understand the system. Would that not save time spent on fruitless appeals and on the other problems described earlier?

Mr. Bayley: I agree that local disability information and advice workers have an extremely important job. In fact, on Friday evening in Birmingham, I spoke at the conference of the Alliance of Disability Advice and Information Providers. My hon. Friend will know that I recently made a couple of presentations in the House to inform hon. Members of what the medical service of the Benefits Agency is doing to improve the quality and consistency of decisions. I shall certainly consider taking those presentations out on a roadshow with voluntary bodies up and down the country.

Means-tested Benefits

Mr. Peter Viggers: What research his Department is currently evaluating into the advantages and disadvantages of means-testing benefits. [99066]

The Minister of State, Department of Social Security (Mr. Jeff Rooker): The Department is not currently carrying out any research on the advantages or disadvantages of means-testing.

Mr. Viggers: The Government's pensions Green Paper, published a year ago, had as one its objectives the aim of giving
greater rewards to those who have made provision for their own retirement.
It acknowledged the resentment felt by those who, having saved for their retirement, are therefore disqualified from receiving benefits. Are not the Government, with their guaranteed minimum pension for the improvident, doing the opposite of the priority that they set out? Moreover, there has not been the promised review of capital disregards for those with modest savings. Have not the Government, once again, said one thing and done another?

The Parliamentary Under-Secretary of State for Social Security (Angela Eagle): Disgraceful.

Mr. Rooker: I understand the reasons behind the question but it is disgraceful, as my hon. Friend says, to describe as improvident people in receipt of the minimum income guarantee. Such people, because of the nature of their employment, may never have had the opportunity to contribute to an occupational works pension or superannuation scheme.
However, I take the point that the hon. Member for Gosport (Mr. Viggers) makes about capital limits, which have been fixed for many years. We are committed to


reviewing those limits and we will do so, because we do not wish to send a signal that thrift does not pay: we must send a signal that it pays to save. The fact that capital limits were frozen year after year was a disgrace, but we shall correct that by reviewing them during this Parliament.

Mr. Peter L. Pike: I am sure that my hon. Friend recognises the complexity and duplication in having to produce information for many means-tested benefits. What progress are the Government making on one-stop benefits, which will help people and save cost?

Mr. Rooker: We are piloting the one-stop benefit around the country. Eight new pilots start today.

Mr. David Willetts: Does the Minister recall the Chancellor's statement to the Labour conference before the election, in which he said:
I want the next Labour government to achieve what in 50 years of the welfare state has never been achieved, the end of the means-test for our elderly people"?
Does the Minister understand that if the basic state pension is increased in line with prices and the minimum income guarantee is increased in line with earnings, we will end up with more means testing, not less? Why will he not admit that that is the clear, deliberate, conscious policy of this Government and that it deters people from saving?

Mr. Rooker: I am not clear what solution the hon. Gentleman advances—he would probably argue that that is not his job. Too many pensioners are on the means test, and that has been the case for many, many years. Without the proposals in the Green Paper mentioned by the hon. Member for Gosport (Mr. Viggers), 3.5 million pensioners—one in three—would be on the means test in 2050. The proposals in the Green Paper on the stakeholder pension and on the second state pension will reduce that figure considerably. We do not intend to tip pensioners into the means test, as the Opposition allege.

Mr. Willetts: There is no point in talking about such long-distant visions if, year on year, the Government spread means testing. Does the Minister accept the calculation of the Institute for Fiscal Studies that people will need a fund of £130,000 to avoid being trapped on the Government's minimum income guarantee? If he does not, will he offer an alternative calculation? People planning for their retirement must know how much to save to keep themselves above the Government's means tests?

Mr. Rooker: Yes, indeed. The No. 1 priority of people should be to plan for their retirement throughout. They were never told that by the previous Government; they were left high and dry and too many have ended up on the means test. As we have made clear, there must be a policy for today's pensioners and for tomorrow's—but not the same policy. There are pensioners who have to be helped today, which is why the minimum income guarantee was introduced. As the hon. Gentleman well knows, helping those pensioners by an across-the-board increase would not put an extra penny in their pockets. We are determined to target resources on today's poorer

pensioners while making adequate plans and preparations in law to ensure that tomorrow's pensioners retire on a decent income above the means test.

Volunteering

Mr. David Kidney: What assessment he has made of the obstacles raised by social security rules to volunteering. [99068]

The Parliamentary Under-Secretary of State for Social Security (Angela Eagle): We are keen to encourage voluntary work. We recognise that it can play a significant role in preparing people to enter work, especially those who may have been out of the labour market for some time. People who are in receipt of social security benefits may do unlimited amounts of voluntary work without it affecting their benefit, as long as other eligibility conditions continue to be met.

Mr. Kidney: On Saturday, I co-hosted a conference in Stafford for voluntary organisations about recruiting and retaining volunteers imaginatively entitled "Desperately Seeking Volunteers". Those present were complimentary about the Government's attitude to allowing people to undertake voluntary work, but they identified two residual areas where obstacles remain. The first was the obstructive attitude of a small number of staff at the Benefits Agency and the Employment Service who tried to get in the way of their volunteering. The second was the medical eligibility test for benefits such as incapacity benefit and disability living allowance, where, if people put their heads above the parapet for voluntary work, they run the risk of being ruled as fit for paid work. Does my hon. Friend agree that, with a little central direction from her, both those minor obstacles could be smoothed away?

Angela Eagle: If there are pockets of obstruction, perhaps my hon. Friend will let me know where they are and I will see what I can do to put an end to them. When we abolished the 16-hour rule for incapacity benefit, we made it quite clear that we encourage people who are currently on benefits to volunteer. There is no limit to the number of hours for which they may volunteer. If my hon. Friend can give me further details on that matter, I shall deal with it.

Mr. Laurence Robertson: Does acting as a local councillor qualify as voluntary work? If so, should a local councillor be able to collect disability benefits?

Angela Eagle: I understand that there is a disability benefit disregard for those who serve on councils. If the hon. Gentleman has a particular point of detail, perhaps he will write to me and I shall certainly deal with it.

Benefits Expenditure

Mr. Owen Paterson: If he will make a statement on his Department's forecasts for expenditure on social security payments. [99070]

The Secretary of State for Social Security (Mr. Alistair Darling): Social security spending is growing at well under half its rate during the previous


Parliament, and is now taking a declining share of national income—an achievement that the Conservative Government never managed.

Mr. Paterson: That is exactly the answer that I received during the statement about two weeks ago. When the Prime Minister spoke at Church house on 7 May 1997, he said that one of his main priorities would be to reduce social security spending. In that case, why does table B12 of the Government's figures in the pre-Budget report show that social security benefits will increase from £93.3 billion to a massive £103.6 billion?

Mr. Darling: I am glad that the hon. Gentleman is now getting the message that social security spending is growing at well under half the rate that it did under the previous Government. Of course, it is growing slightly, but it is growing at half the rate that it did under the previous Government. He may be interested to learn that so far in this Parliament, as a result of getting more people into work, we have saved more than £7 billion. That is a direct result of the Labour Government's economic policies and of our policy of getting people back into work.

Mr. Frank Field: Will my right hon. Friend draw the Opposition's attention to the simple fact that, if more and more of us live for longer in retirement, the social security bill—for example, that for pensions—will rise? Is not the important commitment made by the Government that, although the total social security bill will rise, the proportion met by taxpayers—if we consider public and private provision—will fall?

Mr. Darling: My right hon. Friend is right. The Government's strategy, as set out in the Green Paper published a year ago, is to ensure that all those who can make provision for themselves should do so. The first leg of improvements needed to implement that is part of the Welfare Reform and Pensions Act 1999; the second is in legislation that will be put to the House shortly.

Mr. David Willetts: Will the Secretary of State confirm that the second most important reason for the reduction in social security plans between March and November is the £1.7 billion fall in disability benefit expenditure? Will he explain why, over the past seven months, he has miraculously reduced his forecast for disability benefit spending by £1.7 billion? Does that have anything to do with the means-testing of benefits that was put through the House only the other day?

Mr. Darling: When the hon. Gentleman thinks about the matter—he has a reputation for thinking about things—he will realise that the changes in the Welfare Reform and Pensions Act do not come into effect until 2001. There are two reasons for the reduction in expenditure, the first of which results from changes introduced by the Conservative Government in 1995. Secondly, we are tightening all the gateways to the social security system to ensure that those who are not entitled to benefit do not receive it. If they are entitled to benefit, we ensure that we give more help than ever before. Those changes will be welcomed by most reasonable people.

Pensions

Mr. David Crausby: If he will make a statement on his policy on the link between pensions and increases in pay. [99071]

The Minister of State, Department of Social Security (Mr. Jeff Rooker): Our policy, which was set out in the manifesto, is that the basic state pension should be uprated at least in line with prices. The poorest current pensioners will, of course, benefit from the recently announced increase of 4.6 per cent. to the minimum income guarantee. In the longer term, pensioners will benefit from the state second pension, legislation for which we shall shortly introduce. I can also announce that a consultation document on the contracting-out aspects of the state second pension will be published later today. Copies will be placed in the Libraries of both Houses.

Mr. Crausby: I thank my hon. Friend for that reply. The Conservatives broke the link between pensions and pay. I accept that the Government cannot cure overnight the problems associated with 18 years of the previous Government, but does he agree that pensions received by the elderly are not charitable donations from the Government, but are earned as a result of the national insurance contributions that they paid throughout their life, which increased as their wages increased? Is it not morally right that pensions should increase as wages increase?

Mr. Rooker: My hon. Friend is quite right about national insurance contributions, but let us not beat about the bush. The basic state pension has never provided an adequate income on which to live, whether people have been fully paid up or not. I remind him that in the first three years of this Parliament pensioners as a group have received, via the winter fuel discount, which is not means-tested, and the minimum income guarantee, which is means-tested, £800 million more than they would have received if the basic state pension had been increased in line with earnings.

Mr. David Prior: Does the Minister agree that his policies will increase the number of pensioners receiving means-tested benefits?

Mr. Rooker: No, I do not accept that.

Minimum Income Guarantee

Mr. Vernon Coaker: What estimate he has made of the number of pensioners benefiting from the minimum income guarantee. [99074]

The Minister of State, Department of Social Security (Mr. Jeff Rooker): In May 1999, 1.4 million pensioners were benefiting from the minimum income guarantee.

Mr. Coaker: I thank my hon. Friend for that reply. That figure means that a huge number of pensioners throughout the country, including in my constituency of Gedling in Nottingham, have benefited from the Government's policy. However, as he is aware, there is a


problem with take-up. Will he investigate whether we can introduce imaginative measures to get pensioners who are not claiming the minimum income guarantee to claim it?

Mr. Rooker: Yes, I can give my hon. Friend that assurance. There is a problem with take-up—which, before anyone says anything, is inevitable with a means-tested benefit. However, there are also problems with take-up of attendance allowance, which is not means-tested. Too many pensioners are missing out. We estimate that take-up is about 40. per cent., so there are opportunities to increase take-up of that allowance. Millions of pensioners receive council tax benefit and housing benefit, as do millions of other people, and no stigma is attached to those benefits. We shall run a Government-sponsored take-up campaign for the minimum income guarantee early next year.

Mr. Desmond Swayne: Has the Minister taken any notice of the results of the focus groups that insurance companies have been running on the minimum pension guarantee, and is he not concerned that the message has obviously got across to generations of people whose retirement is some time away that they will gain no advantage from investing and saving for their future if their income is low?

Mr. Rooker: I hate to admit this, but the answer is yes. I have taken account of the focus groups because, along with some of my hon. Friends and the hon. Member for Northavon (Mr. Webb), I recently attended one of those groups, which was illuminating. The reaction was exactly the same as that of some of my constituents.
Nevertheless, the central issue that emerged was the need to save and prepare for a pension many years in advance, and the thought that, if it is left too late, it becomes more expensive. That has got across to people, as has the point that I made earlier—that anyone who relies solely on the basic state retirement pension and makes no other provision will, as has always been the case, retire in abject poverty.

Household Income

Miss Julie Kirkbride: If he will make a statement on the gap between the rich and the poor, as measured by household income. [99077]

The Minister of State, Department of Social Security (Mr. Jeff Rooker): The gap between rich and poor widened dramatically in the 1980s. We are, as a Government, serious about creating a fairer society—an aim that I hope the hon. Lady shares. We want all our citizens to have the opportunities to maximise their potential and we want to create a society in which all can share in the growing prosperity of the nation. The facts on poverty and social exclusion in this country are absolutely shocking; we intend to address them.

Miss Kirkbride: As usual, the hon. Gentleman did not answer the question. Before the election, the Labour party made great play of the fact that the gap between the rich and the poor was widening. That is still true under this Labour Government and it must increasingly be true while state benefits—some people will always rely on state benefits—increase according to inflation and the market

increases salaries by a greater percentage. Is it not one of the great Labour lies that his Government will do anything to reduce the gap between the rich and the poor?

Mr. Rooker: I regret that the hon. Lady takes that approach. It is a fact that we have taken hundreds of thousands of children out of poverty, have introduced the working families tax credit so that no one else will ever be better off on benefit than in work—that must make a substantial difference—and are the first Government to produce a poverty audit of this country. In effect, that was an audit of the legacy of the previous Government, for which we are prepared to be accountable year in, year out. Between 1979 and 1995 –96, the share of income received by the bottom 20 per cent. of the population went down from 9.8 per cent. to 6.7 per cent. while the share of the top 20 per cent. went up from 35 per cent. to 41 per cent. I do not know how the hon. Lady had the brass neck to ask her question.

Mr. David Winnick: Would it not be appropriate for every Tory Member in the Chamber to apologise for the appalling poverty into which so many people—my constituents and others—were forced as a result of Tory policies during their 18 years in government? Does my hon. Friend expect any such apology to be made by any Tory Member from the Front or Back Benches?

Mr. Rooker: I expect it, but I suspect that it will not happen.

Dr. Julian Lewis: Will the Minister depart for a moment from ploughing through his set text to answer the question asked by my hon. Friend the Member for Bromsgrove (Miss Kirkbride)? She referred to the increasing gap between the rich and the poor under this Government. Is it not a fact that the latest survey of households on below average income shows that the gap between rich and poor is increasing under this Government? Will he nominate—or will he even take a flier at guessing—which year the Government will succeed in closing that gap rather making it wider?

Mr. Rooker: I answered the question that I was asked. I was asked to make a statement on the gap, and, as I said, it is too wide. Although I thought that the hon. Gentleman was bright enough to do so, he cannot take on board the fact that, as everyone knows, for the first two years of this Administration we kept to the spending limits of the previous Government —

Mr. Eric Forth: It was the Government's choice.

Mr. Rooker: Yes, it was our choice. We kept to those spending limits and the policies of the previous Government will permeate for some time to come. There is no doubt about that. Everything—[Interruption.] I am telling the truth. Everything cannot be solved in 32 months.

Customer Service

Mr. Hilary Benn: If he will make a statement on steps his Department is taking to improve customer service in the social security system. [99078]

The Parliamentary Under-Secretary of State for Social Security (Angela Eagle): The Department is considering how to ease the transition from benefits to work as part of customer services improvements and to improve the administration of benefits to remove barriers to work. Among other things, we are looking at linking rules and run-ons, such as the two-week run-on for lone parents who are on income support and jobseeker's allowance that was recently put into effect and the 12-month linking rule for those on the new deal for disabled people.

Mr. Benn: I thank my hon. Friend for her answer. Does she agree that as well as addressing the poverty trap we

need to continue to address the process trap, by which I mean the problems that claimants can experience in moving off benefit and into work and back again, which act as an obstacle to seeking a job?

Angela Eagle: I cannot agree more with my hon. Friend's comments, and I assure him that we are focusing on the path leading from benefits back into work and on what happens when people take part-time or temporary jobs. That is why the new ONE pilots include a better-off calculation to reassure people about whether they will be better off in work. We are considering redesigning the system to ensure that if a job does not work out, people can get back on to benefits with the minimum hassle.

Crime Reduction Strategy

The Secretary of State for the Home Department (Mr. Jack Straw): With permission, Madam Speaker, I should like to make a statement about the Government's crime reduction strategy, which I have published today. Copies of the strategy document and of the Home Office model of recorded crime are available in the Vote Office.
First, however, I am sure that I speak for the whole House in expressing my shock and outrage at the attack that took place yesterday at St. Andrew's church, Thornton Heath in the London borough of Croydon, in the constituency of the Under-Secretary of State for Education and Employment, my hon. Friend the Member for Croydon, North (Mr. Wicks). It is hard to think of anything more terrible than to have the serenity of a church service destroyed by such an attack. I should like to express our deepest sympathy for those who were injured, their families and friends and the entire congregation who witnessed that awful event. I should like also to express my admiration for the courage of those who intervened to save the largely elderly parishioners from even worse injury.
Over the century, recorded crime has risen by an annual average of around 5 per cent. Recorded crime in fact doubled in the 1980s and early 1990s. Thanks to the tremendous work of the police and local authorities, it has fallen steadily since then—by 19 per cent. over the past five years and by 9 per cent. between 1997 and 1999. For the first time, last year's British crime survey showed that the overall level of crime, including incidents not reported to the police, was on the way down, as was fear of crime.
Over the past two and a half years, we have sought to lay the foundations for the most co-ordinated attack on crime and its causes: 375 local crime and disorder reduction partnerships are now up and running; over the next three years, £400 million will be put into evidence-led crime reduction programmes, including the biggest ever investment in closed circuit television; £60 million is being invested in schemes to cut burglary, and there is help to protect the most vulnerable pensioners.
A new crime fighting fund has been established with new money to recruit 5,000 more officers over and above those already planned. We have made available £34 million for extending the DNA database and are putting an extra £50 million towards transforming police communications. All that is on top of the extra £1.25 billion provided to the police over this year and the next two years.
We are insisting on tough, consistent prison sentences for serious criminals, far more rigorous enforcement of community sentences and zero tolerance of anti-social behaviour. Alongside that we want quicker, more effective punishment for persistent young offenders, with a thorough modernisation of the whole system for dealing with young criminals.
There is, however, more to do. Despite recent falls, crime is still way above its level of the late 1970s, and the level of property crime is significantly higher than in most comparable countries.
Over the past five years, as figures published this morning show, all forces have achieved reductions in crime, but some have been much more successful than

others: for example, Northumbria, Kent, Durham, Surrey and Gloucestershire have all achieved reductions in recorded crime of more than 30 per cent. Those statistics reveal that similar police forces and local authorities, with similar problems and similar resources, achieve widely differing performances in crime reduction. Reducing the crime rate of the 21 forces with the highest rates to that of the average would cut recorded crime by 0.5 million. However, we want to aim higher: our emphasis is on encouraging the police, local authorities and others to raise their performance. I have set out how we can raise performance and reduce crime across the country in the strategy document.
The best value regime set up under the Local Government Act 1999 establishes the process for delivering a step change in the quality of all local services, including crime reduction. From April 2000, we should like every police authority and local crime reduction partnership to set five-year targets for reduction in the three sets of offences of greatest concern to the public: vehicle crime, domestic burglary and street robberies. For police authorities, the aim should be, over that five-year period, to raise the level of their performance to that of the top 25 per cent. of comparable authorities. We shall discuss the comparators and the process in more detail with chief constables and police authorities. Of course, we shall take into account the particular circumstances of individual forces.
From January next year, we shall publish crime statistics not only for entire police force areas, but for individual police divisions, or basic command units. By April 2001, we should have data available to ensure top quartile targets at the level of the local partnerships. Together, those measures will enable people to see how their local police and partnerships are doing, compared with performance in equivalent areas.
I recognise that, to raise the performance of the local partnerships, strong leadership and support are needed at national and regional level. At national level, we are to establish a new national crime reduction task force to be chaired by the Minister of State, my hon. Friend the Member for Norwich, South (Mr. Clarke), with the chief constable of Kent, Mr. David Phillips, as vice-chairman. We are discussing with the Local Government Association the appointment of a second vice-chairman to represent local authorities. At regional level, we shall appoint new crime reduction directors, based in the Government offices for the regions. The regional directors will work with the police, local government and other agencies to support crime reduction work and help to sustain improvements in performance.
From January, Her Majesty's inspectorate of constabulary will lead a new inspection on crime reduction with the Home Office and the Audit Commission to examine how forces, at basic command unit level—that is, district level—and partnerships are dealing with local crime and disorder problems. I should also tell the House that, in response to calls from the police service for a simplification of Government priorities, the number of ministerial priorities for the year 2000–2001 has been reduced to two: reducing crime and disorder and increasing confidence among minority ethnic communities.
On the Home Office model of recorded crime, from the early 1990s, economists in the Home Office have sought to isolate those factors external to the criminal justice


system—such as levels of economic activity and employment, the stock of goods, and the number of young men—which might historically have been related to movements in recorded crime. The models suggest that there is a strong historic association between changes in the level of recorded property crime and some of the key economic and demographic factors.
The economists have made a projection of what effect they believe that association would have on the level of recorded property crime, assuming no positive intervention by the police, local authorities or Government. Those projections are not forecasts of what the Government believe will or should happen. Criminal behaviour is wrong and the model provides no excuse for it. Moreover, there is nothing inevitable about the trend in the model. The models for the four-year period 1997 to 2001 suggest that, if no positive programmes had been or were to be put in place, by 2001, theft would be 40 per cent. higher and burglary 25 per cent. higher than in 1997. However, half way through this 1997–2001 period there is good evidence that we are bucking the projected trend. Burglary in the first two years of this period is down and not up; and vehicle crime is down, not up. The research therefore underlines the relative success achieved so far, but also the scale of the challenge that we face. One key of many to meeting that challenge is the better targeting of crimes and of criminals.
We therefore have a strong focus in our strategy on vehicle crime and burglary, which together account for 40 per cent. of all recorded crime. Tomorrow I will be announcing the successful projects in the first round of the £150 million CCTV programme, significantly aimed at reducing vehicle crime. From Wednesday, any offender convicted of three separate domestic burglary offences from that date will face a minimum prison sentence of at least three years. Also on Wednesday, curfew orders enforced by electronic tagging will become available to all courts across the country.
Later this week, we will be announcing plans for the distribution of the £20 million for drug arrest referral to establish such schemes in every police custody suite by April 2001, to get offenders off drugs and into treatment. The crime and public protection Bill will facilitate the use of drug testing at arrest and charge, and for offenders on community punishments to deter further drug use and offending. The Bill will also extend the possibilities for electronic tagging and provide for reform of the probation service.
Also published today are figures which show that on youth crime we are well on our way to meeting our key pledge to halve the time that it takes to deal with persistent young offenders from arrest to sentence by March 2002. In 1997, the average time was 142 days—more than 20 weeks. In 1998 it was 125 days. This fell to 110 days across the first half of 1999. Individual areas are showing how much can be achieved through good partnership between agencies. Two areas, north Wales and Warwickshire, have been particularly successful, managing already to achieve an average of fewer than 71 days.
By modernising and speeding up the court process with the national roll-out of the Narey changes we are meeting our pledge to relieve the police of unnecessary bureaucratic burdens to get more officers back on the beat and on to operational duties. Above all, we are

transforming the way in which victims are treated, with the measures in the Youth Justice and Criminal Evidence Act 1999, and a 50 per cent. increase in funding for victim support to provide witness services in every magistrates court.
The Government are determined to put the public's protection first. Ours is an ambitious programme which will, if achieved, make major inroads into reducing crime. The fight against crime is an integral part of our commitment to make Britain a better place in which to live. If we can cut crime, we can add value to every aspect of our life. I commend the strategy to the House.

Mr. David Lidington: First, I associate the Opposition with the Home Secretary's comments about the appalling crime which took place at St. Andrew's church in Croydon yesterday. I am sure that the Metropolitan police will be conducting a full investigation and that lessons can be learned when their report is made known. For today, however, I think that the right response is just to express sympathy for the victims and their families and pride in the courageous actions of those who managed to disarm the alleged criminal.
I thank the Home Secretary for his statement and also for his courtesy in giving me early sight of the background documents to his announcement. I thank him also for giving me the opportunity some little while in advance to see a copy of the statement.
We can welcome and endorse several aspects of the statement. Indeed, one or two items in the right hon. Gentleman's list of measures seem more than a little familiar from the period before May 1997.
First, may I ask about the extension of electronic tagging as a means of enforcing curfew orders? The Opposition support that in principle, but we have some questions. We would welcome the use of electronic tagging as part of a community penalty. Does the Home Secretary accept that in many cases, it would make sense to link a tagging order to a compensation order, so that a criminal is deprived of his liberty during his leisure time, but during his working hours he is earning money from which to pay compensation to the victims who have suffered from his actions?
Will the Home Secretary take this opportunity to deny media reports last week that the Government are planning to use tagging to allow for the early release of serious, violent and sexual offenders? Does he accept that such a step would be an abuse of the tagging system, and that such criminals ought not to be released early?
Secondly, I welcome the Home Secretary's announcement of the expansion of the DNA database. That follows his announcement of that during his Labour party conference speech, the announcement during the Prime Minister's Labour party conference speech, and the exclusive briefing to the Daily Mirror. Can the Home Secretary confirm what the Government intend should happen to samples taken from people who are subsequently acquitted of charges brought against them? Are we right to understand that, as with fingerprints, those DNA samples should be destroyed after an appropriate period?
Can the right hon. Gentleman comment on the £34 million that he mentioned in his statement? Is that entirely new money, is it funded from the reserve, or is it


coming from elsewhere in the Home Office's budget? Can he assure us that it will not cause cuts to other services in his Department?
Finally, on the measures that we welcome, I very much applaud the Government's decision to implement the three-strikes provision in the Crime (Sentences) Act 1997 in respect of recidivist burglars. Presumably, that will lead to a revision of the Home Office forecast of the future prison population.
Can the Home Secretary say by how much he expects the prison population to expand, following the introduction of that measure, and over what period? Does he agree that no Government could implement the legislation
unless there were an assurance of the resources to house and finance the increased prison population"?—[Official Report, House of Lords, 18 March 1997; Vol. 579, c. 885.]
Those are not my words, but the words of the noble Lord McIntosh of Haringey when the Bill was going through Parliament. How does the Home Secretary reconcile that need with the reported letter from the then Chief Secretary, which made it clear that the Treasury was not prepared to countenance a further reserve claim to accommodate the pressures on the Prison Service?
How many extra prison places will be required? What are the implications for the prison building programme— for example, does it mean that the Government will be contracting for more private sector prisons over the next few years? How much will that prison accommodation cost, and where will the Home Secretary get the money?
The Home Secretary made much in his statement, and makes even more in the strategy document published today, about the various measures that the Government have introduced. May I urge on him the need to keep those measures under constant review? Will he confirm, for example, that of the drug treatment and testing orders so far passed by the courts, more than half have been breached, and about one third have been revoked because of the seriousness of the breach? Can he say whether the number of anti-social behaviour orders has now risen above the grand total of seven? Can he confirm that there are still no child curfew orders in operation?
There have been reports recently that the Home Secretary plans, just one year on, to introduce amendments to his flagship Crime and Disorder Act 1998. Can he confirm that? Does he agree that there is a need for independent audit and scrutiny, not just of the police service, but of the Government's measures on crime and crime reduction?
We are happy with the idea that there should be greater public access to information about police performance, but the Home Secretary must understand that, after the smoke and mirrors trick over the figure of 5,000 extra police officers that he claimed at his party conference, there will be an element of suspicion that the publication of league tables amounts to an effort by a Home Secretary who knows that crime is once more rising to deflect blame for that away from himself and on to the police service. We know that the 5,000 promised additional officers have proved to be a mirage. Will the Home Secretary confirm that the vice-chairman of the Police Federation said
he hasn't got a cat in hell's chance of recruiting 20,000 officers over the next three years",
and that the chairman of the Police Federation claimed that his service was being "short changed"?
The Home Secretary set up a convenient Aunt Sally in the form of an economic model, which, to no one's surprise, predicts a rise in crime. I suspect that the predicted rise is likely to be even higher than the actual increase over which the Government will preside. People want a fall in crime and reduced fear of crime, not simply an increase that falls slightly below that predicted by a team of economists in the Home Office.
After a five-year fall in recorded crime, it is increasing; police numbers are down by more than 1,000 and are due to decrease further in the next 12 months; police budgets are stretched, and efficiency savings are used to plug the deficit rather than to improve front-line services. Will the Home Secretary accept that his success and that of the Government should be measured not only by targets, aspirations or good intentions, but on whether their policies lead to the fall in crime that the public want? The Government's record contains little to suggest that they are capable of achieving the success that the country needs.

Mr. Straw: I thank the hon. Member for Aylesbury (Mr. Lidington) for his remarks about the terrible events in the church yesterday. As he said, questions will need to be asked and answered about that eventually, but I know that the House accepts that the day after the event, and while the police investigation continues, is not the right time for that.
I am glad that the hon. Gentleman welcomes many of the announcements that I made. I am happy to put on record—the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) will wish to know that it is already on record in a Home Office press notice—that the genesis of the provisions for burglars who are convicted on three separate occasions is the Crime (Sentences) Act 1997, which was passed under the previous Administration.
The hon. Gentleman asked about the effect of the provisions on the prison population and whether the prison projections took that into account. The effect has already been fully taken into account because, although we inherited the policy from the previous Government, I was also committed to it. I have not got the projections in my head but I am happy to send them to the hon. Gentleman. He knows that the prison population has risen by approximately 5,000 in the past two years and that we are making arrangements to deal with a further increase.
I understand those people, mainly outside the House, who sometimes suggest that we should set an arbitrary limit on the number of prison places, but I believe that we should provide as many prison places as the courts require to deal with criminals who need to be imprisoned. We shall have a chance to reduce the prison population significantly only when we can get crime down to 1970s levels.
The hon. Gentleman asked about DNA. I am pleased to tell the House that the Prime Minister gave a DNA sample today and that it did not match any samples on the DNA suspects database. The £34 million is new money, over and above that announced in the comprehensive spending review.
The hon. Gentleman asked about electronic tagging—I am glad that he now appears to support it. That may be because he has read the unanimous report of the Home Affairs Select Committee, which supported its use not


only as a court punishment, but for the early release of appropriate prisoners. We have no plans or intention whatever to provide for electronic tagging to facilitate the early release of serious or sexual offenders. Let me make that clear, with a full stop—none whatever.
The hon. Gentleman asked about the drug treatment and testing order. Recently, we published a research study of the pilots and, from recollection, I think that the figures he gave are correct. That shows the importance of rigorous enforcement of community punishments, which has not occurred in respect of traditional punishments meted out by the courts and enforced—or not enforced, often—by the probation service. I am sorry that a third of those orders are being revoked, but they are being revoked quickly and on clear scientific evidence. If there were similar rigorous enforcement of other community punishments, such as probation or community work service orders, we would not have such levels of repeat offending on them. We are determined to make sure that the order is used by the courts—not in respect of offenders who would otherwise go to prison, but for those who would otherwise be given a community punishment—to ensure either that they get off drugs and off crime or, if they do not, that they go to prison.
The hon. Gentleman asked about child curfew orders. There have been none, as he knows, and we are consulting local authorities and the police about whether the age limit should be raised from 10 to 16. I am at a loss to understand where he is coming from on anti-social behaviour orders. They were asked for by the police and local authorities and they have been welcomed by them. Where they have been used—for example, in Lancashire and in Derbyshire—they have turned out to be an important tool in cracking down on anti-social behaviour. It is often the case that criminal justice agencies, being conservative with a small "c", take some time to get used to and to implement new and fresh measures, but I would have thought that Conservative Members would be doing themselves a favour if, instead of criticising the measure, they said that, wherever we are faced with evidence of serious anti-social behaviour, the orders should be used. That is what Labour Members are saying. Conservative Members will find themselves on the wrong side of the argument if they say that such orders should not be used.
I have two more points to make. First, the hon. Gentleman asked about an independent audit of our measures. I am happy for there to be such an audit and those matters should be kept under continuous review. One way in which that can happen is through the Home Affairs Committee continuously monitoring what we are doing and I would welcome that. He talked about what he described as the mirage of 5,000 additional officers. The money that we are putting in to secure 5,000 officers over and above the 15,000 who are predicted to be recruited in any event by the police service is wholly new money. We are also providing for that money to be ring-fenced so that it is used for that purpose, and that alone.
I remind the hon. Gentleman that when the previous Administration were in office, his boss, the right hon. Member for Maidstone and The Weald (Miss Widdecombe), said that she had
already reminded hon. Members of the commitment made by my right hon. Friend the Prime Minister"—

the right hon. Member for Huntingdon (Mr. Major)—
to provide funding for an additional 5,000 police officers over three years."—[Official Report, 29 January 1997; Vol. 289, c. 457.]
The only thing was that they did not provide sufficient funding and did not ensure that the money was ring-fenced. Instead of that pledge being met by even a 1,000 or 2,000 increase in the total number of police officers, the number fell by 1,500 over those five years.
Lastly, what will be our measure of success? We want the crime reduction partnership to succeed, but on one measure I am confident beyond peradventure that we shall succeed: under our Administration, crime will not double, as it did under the Conservatives.

Several hon. Members: rose—

Madam Speaker: I would remind the House that that opening exchange has taken almost 30 minutes. I do not want long, rambling statements from hon. Members, but pertinent questions to the Secretary of State and brisk exchanges. I am sure that he will oblige me with brisk answers.

Mr. Geraint Davies: I welcome my right hon. Friend's statement.
On behalf of the Under-Secretary, my hon. Friend the Member for Croydon, North (Mr. Wicks) and myself, I should like to offer our deepest condolences to the victims and their families who suffered in the brutal attack at St. Andrew's church, Thornton Heath yesterday. We also pay tribute to the bravery of PC Tracey, who was involved in preventing further bloodshed and probable death. I ask that the House extends its sympathy to the community, which is in a state of shock and horror. Will my right hon. Friend take a personal interest in the investigation of that horrific event?

Mr. Straw: The House will wish to be associated with the remarks of my hon. Friend. I am grateful that he also places on record the concern felt by the Under-Secretary, in whose constituency this incident took place. As the House understands—although the public outside sometimes does not—my hon. Friend is a Minister and a member of the Front Bench, so is not able to take part in these exchanges. I fully associate myself with what my hon. Friend the Member for Croydon, Central (Mr. Davies) said, and I am taking a personal interest in the investigation of that appalling crime, as is the Commissioner of Police of the Metropolis.

Mr. Michael Howard: I also associate myself with what has been said about the dreadful attack in Croydon yesterday.
I welcome the Home Secretary's proposals, virtually all of which, so far as I can see, build on the measures that I put in place between 1993 and 1997. Will he confirm— because I have never heard it from his lips—that recorded crime fell from just over 5.5 million in 1993 to just over 4.5 million in 1997, which was a reduction of about 17 per cent. and the biggest fall ever recorded? In view of some of the reports in this morning's newspapers that the Government intend to create a national DNA database, will he also confirm that the national DNA database—the first in the world—is in existence, having been established by the previous Government, and has been making a


significant contribution to crime reduction for a number of years? Finally, will he tell us whether the Prime Minister's DNA sample will be preserved?

Mr. Straw: I welcome the right hon. and learned Gentleman's remarks. I think that he has undergone a Pauline conversion to consensus politics. I say that with generosity, and I hope that he takes it in that spirit. He is right, and it is ridiculous to argue about the figures, which are a matter of historic record. He will also accept that the fall that took place between 1993 and 1997—and a fall it was—

Mr. Eric Forth: Oh!

Mr. Straw: Of course it was. I am happy to concede that, if Conservative Members will also concede that, in the previous 14 years, crime had risen relentlessly to the stage at which we had the worst record compared with almost any other major industrialised country.
The right hon. and learned Gentleman also asked about the DNA database. I am sorry that I omitted to reply to the point made by the hon. Member for Aylesbury (Mr. Lidington). I understand that the Prime Minister's DNA sample will be destroyed, because it disclosed nothing suspicious. The same regime applies to any DNA sample as applies to fingerprints.

Mr. Robin Corbett: I congratulate my right hon. Friend on the range of measures announced. It is not just the courts that are reluctant to make use of the powers in the Crime and Disorder Act 1998. I have evidence from my constituency that some police officers—although not all—and many housing officers do not know about the powers available to them to obtain anti-social behaviour orders or are not talking to each other. Will my right hon. Friend and his team constantly remind local government in particular of the availability of those powers?
All that people in my constituency want is a return of the safety and security that has been stolen from them over the years. They will judge the Government's success and that of the police—I welcome the publication of performance figures—by the way in which measures are taken in partnership to reduce crime and the fear of crime in their streets and in and around their homes.

Mr. Straw: I entirely understand my hon. Friend's frustration. I have written to every chief executive and every chief constable in the country, urging them to make use of the orders—orders which did not fall out of the sky, but were sought by them, and on every detail of which they were consulted. To ensure that there are no bureaucratic blocks in the use of the orders, in some areas but by no means in all—many areas now intend to use them—I have asked my noble Friend Lord Warner of Brockley, who chairs the Youth Justice Board of England and Wales, to spearhead action in the Home Office and with local authorities and the police to ensure that individual officers at local level, and individual housing officers, understand that the powers are available, and understand the value to them and, above all, to local communities of using those powers.

Mr. Simon Hughes: I associate both my Liberal Democrat

colleagues and those of us who represent south London constituencies with the expressions of sympathy and thanks to those who assisted at St. Andrew's church in Thornton Heath yesterday.
All right-minded citizens are in favour of crime reduction, and a crime reduction strategy. Does the Home Secretary accept that people also believe that crime reduction is directly linked to the number of police who are there to achieve both a reduction in crime, and a reduction in the fear of crime?
This morning, the Home Secretary issued a table showing figures for the police forces in England and Wales. He divided them into the 21 with the highest crime reduction rates, and the 22 with the lowest. Will he comment on the fact that his own table shows that only eight of the 21 forces with the highest reduction rates have experienced a fall in police numbers since his party took office, and that, on average, there has been a rise in numbers in those forces? Of the 22 forces with the lowest rates, 17 have experienced a fall in numbers; the average number in each force has fallen by 55, and the total has fallen by 1,200. Does the right hon. Gentleman accept that a reduction in crime and the fear of crime depends on the number of police officers available to fight crime? Will he give a pledge that all those forces will have the increase to which he aspired for the country as a whole?
Let me ask one more question. The Home Office budget for crime reduction proposals is about 3 per cent. Only about 3 per cent. of crimes ever result in people being arrested or cautioned. Will the Home Secretary consider again a change in the balance, so that a much larger part of Government resources, effort and interest can be devoted to crime prevention, and we can reduce the amount of crime by preventing it from happening in the first place?

The Minister of State, Home Office (Mr. Paul Boateng): He has lost the plot completely.

Mr. Straw: That is probably accurate.
I believe that good police forces can always make use of additional police officers. That is one of the reasons why we have established a crime fighting fund to increase the number of officers. If, however, the hon. Member for Southwark, North and Bermondsey (Mr. Hughes), rather than picking out the odd two-year period, compared the changes in crime levels in police force areas with the changes in police numbers over five years, he would see that there is the weakest correlation. I am happy to send him the regressions.
As it happens, in the Metropolitan police area the number of police officers has fallen by 2,000. To be fair, it fell by 2,000 under the last Administration. At the same time, the force has made significant inroads in dealing with the crimes that worry the public the most. It is crucial for us not just to put additional resources into the police service, but to ensure that they are used effectively, and that the forces that are at the bottom or the middle of the tables aspire to the performance of the best of those that are comparable.
As for the hon. Gentleman's point about crime prevention, I simply do not know where he gets his figures. We have put £400 million into crime prevention, more than any previous Administration have provided.

Dr. Tony Wright: We know from DNA and CCTV that science and technology can make


an important contribution to crime reduction. May I make a point about vehicle crime, which my right hon. Friend mentioned? Car advertisements all tell us that cars are pretty, that they are cool and that they are fast, but never that they are secure. Why are we not making vehicle manufacturers produce secure cars? Would that not make a huge contribution to crime reduction?

Mr. Straw: It is true that cars are advertised for their speed and for other attributes, but I place on record the fact that, over the past 10 years, vehicle manufacturers have gone through a step change and taken security seriously. They understand that it is an important selling point for them, as it is for insurers. I am pleased to tell my hon. Friend that the vehicle crime reduction task force is chaired by a leading executive of the Ford Motor Company. All the big manufacturers recognise that their interest lies in getting vehicle crime down.

Mr. John Wilkinson: Crime reduction task forces and regional directors are all very well, but my constituents in outer London are looking for more policemen in the community doing their job visibly and effectively. In those circumstances, can the Home Secretary justify the inadequacy of the funding by his Department to the police service? Is it not true that, in the past five years, Hillingdon division has seen a 14 per cent. drop in manpower—no fewer than 16 uniformed officers and civilians last year and a projected 17 next year? That is wholly inadequate and needs to be rectified, as the police consultative committee has put to him.

Mr. Straw: One of the things that I can claim to have done is to stem the reduction in funding to the Metropolitan police. I ensured that, from 1998–99, there was funding in the budgets that I set not just as the Home Secretary, but as the police authority for London, to stem the reduction in numbers, which had been severe in the previous five years.
The exact distribution of police officers within the Metropolitan police is a matter for the Commissioner. I will pass on to him the hon. Gentleman's concerns, but, at any level of policing, some police services and police divisions are able to deliver more effective reductions in crime than others. The Prime Minister and I were in the Medway area today. As a result of very good intelligence-led policing—not the addition of officers, but greater intensity of work by officers—the area has recorded a 26 per cent. reduction in burglary and nearly a 40 per cent. reduction in motor vehicle theft. It is about resources, but it is also, critically, about how those resources are used.

Mr. Gerald Kaufman: I wonder whether my right hon. Friend is aware of the satisfaction among my constituents at the increase of £10.3 million in the Greater Manchester police budget for this year, which is equivalent to an increase of about £22 million over the past two years. That money will be well used by the excellent police force in our division. Recently, the representative of the police force, Superintendent Brinnand, attended a crowded meeting of my constituents at, ironically, in view of the dreadful events to which hon. Members have referred, Sacred Heart church in Gorton,

where, among other things, my constituents asked for the extension of curfew orders to 16-year-olds. We look forward to that. We also look forward to my right hon. Friend adding impetus to the invocation of such orders and anti-social behaviour orders. Having told me in correspondence that he is happy to come to my constituency, will he give us a date?

Madam Speaker: Order. I ask not for statements, but for questions.

Mr. Straw: I am glad to know that the increase in the budget for Greater Manchester police has gone down well. In view of your comments, Madam Speaker, the answer to my right hon. Friend's last and direct question is that I will give him a date very soon.

Madam Speaker: That is the sort of answer that I like.

Mr. Andrew Rowe: The Secretary of State knows that those who already live in the most unattractive parts of our towns and cities suffer disproportionately from crime. Will he make every effort that he can to ensure that the people who live in those areas can take responsibility for clearing up the mess that is a large part of making people feel that the area in which they live does not matter, so crime and disorder does not matter?

Mr. Straw: The hon. Gentleman is right to say that areas that look neglected and have high levels of incivility suffer the highest levels of direct crime, such as burglary, robbery and vehicle crime, even if they may be similar to other inner-city areas in other respects. That is why we should all be highly intolerant of anti-social behaviour. Unless graffiti and criminal damage are nipped in the bud, an area will quickly graduate to more serious crime.

Mr. Paul Clark: I welcome the strategy. My right hon. Friend has already referred to his successful visit to Medway this morning with my right hon. Friend the Prime Minister to learn about the success of Kent county constabulary, particularly the police force in Medway, on Operation Radium, which has targeted car crime and domestic burglary. Does my right hon. Friend agree that the success was achieved through the careful use of the resources that were available to the police force, particularly through proactive intelligence and the multi-agency working approach?

Mr. Straw: Yes. I am glad that my hon. Friend was with the Prime Minister and me at the presentation today. He makes an important point. More police officers could have been used as bobbies on the beat, but the chief constable made a courageous and entirely correct decision that those resources would be better used on the careful targeting of the crime problems in the area. Crime has been reduced far more by that overall strategy than would have been the case if the officers had simply been on generalised patrol.

Mr. Desmond Swayne: There is an estate in Bransgore that has been tormented by under-age drinkers and miscreants for some time. On the 13th of this month, the police finally apprehended two of them lighting a fire—and they let them go! Has the


Secretary of State seen the survey of police morale published in national newspapers last week, showing that 50 per cent. of police officers are reluctant to make an arrest and that two thirds are looking for another job? What is there in his glossy strategy to answer that?

Mr. Straw: I have not seen the survey and I do not believe it. If the level of juvenile nuisance is so great that it is driving the hon. Gentleman and his constituents mad—as evidently it is—I suggest that he urges the local authority and the police to apply for an anti-social behaviour order. We have had similar problems in Blackburn. The police secured an anti-social behaviour order in respect of one offender and I understand that it has proved very effective.

Mr. Martin Linton: I welcome my right hon. Friend's announcement that he will ask police authorities and crime reduction partnerships to set five-year targets for reductions in vehicle crime, burglary and robbery. Will he set national targets for reductions in burglary and robbery in the same way that he has set a target of a 30 per cent. reduction in vehicle crime?

Mr. Straw: Because burglary and robbery are more local than vehicle crime, we intend to set a national target that will be an aggregate of the local targets, whereas for vehicle crime we have adopted the opposite approach.

Mr. Forth: Will the Home Secretary assess the contribution to crime reduction made by the closure of Chislehurst police station, caused directly by his underfunding of Bromley police in particular?

Mr. Straw: I wholly reject that point. The right hon. Gentleman has to explain his position to his constituents. On the one hand he calls, on their behalf, for increases in spending on the police, and, I dare say, on health and education. On the other, as a member of the extreme right wing of the Conservative party—he seems to be acknowledging the fact—he supports the shadow Chancellor's criticism of our levels of spending on the police and every other public service as reckless and irresponsible. He cannot have it both ways.

Mr. Christopher Leslie: Will my right hon. Friend's strategy do anything about people who make wild, vexatious and unfounded criminal allegations in public? For example, is he aware that the Royal Bank of Scotland has said that it is satisfied that there is no evidence of any computer hacking into its accounts? Is it not time that the Tories apologised for their ridiculous Watergate-style conspiracy theories against Labour?

Mr. Straw: Our strategy is designed to deal with real incidents of crime, not with ludicrous allegations. I understand that, six days later, the Conservative party has provided no details whatever to back up its wild allegations. There is an offence of wasting police time and, unless we get details, the chairman of the Conservative party might well be considered a candidate for being charged with such an offence.

Mr. Crispin Blunt: The Minister of State, the hon. Member for Norwich, South (Mr. Clarke) has just written to tell me that, after taking into account the

increased area of Surrey police's responsibilities, its budget is to be cut. Why is that the force's reward for producing among the best figures that the Home Secretary listed today?

Mr. Straw: The hon. Gentleman knows that the distribution of police grant is based on the standard spending assessment, which is agreed by the police authorities, the Association of Chief Police Officers and the Government. However, it is not a formula over which any Home Secretary has ever sought control, and it is designed to distribute resources as fairly as possible. I well understand the concerns in Surrey, which I have sought partly to offset by the transitional grant—although I accept that that does not go the whole way. Surrey's problems illustrate that when the previous system operated before 1995–96, spending in Surrey was historically higher than in other comparable authorities. That is the root of the problem. If the hon. Gentleman wishes to see me about this matter, I shall be happy to arrange a meeting.

Fiona Mactaggart: I welcome my right hon. Friend's determination to deal faster with young criminals. Is he aware of the evidence of the success of the restorative justice experiments in the Thames Valley area? Does he believe that there is some conflict between using restorative justice—where young criminals accused for the first time may be asked to confront the victims of their crime—and speeding up bringing such people to justice?

Mr. Straw: We are certainly aware of the value of the systems of restorative justice that have been pioneered in Thames Valley by Charles Pollard, the chief constable, which are now being rolled out across the country under the provisions of the Youth Justice and Criminal Evidence Act 1999. There is no conflict between our determination to secure a halving of the time between arrest and sentence and restorative justice, as the procedures of restorative justice start at the beginning of the sentence, not the end. We have taken that into account.

Dr. Julian Lewis: The Home Secretary has been saying for years, rightly, how important it is to nip the plague of graffiti vandalism in the bud. What exactly will his strategy do to put that into practice?

Mr. Straw: There are serious problems of graffiti and criminal damage in many areas which sometimes require action by the police. Usually, however, they require action by the local authorities, voluntary agencies and the police working together. I have seen a number of examples where the local authority has 24-hour anti-graffiti patrols or better lighting, where the authority is applying to the Government for closed circuit television and where the police are taking a properly oriented approach to those difficulties. Every single page of the document is designed to improve the safety and tranquillity of the hon. Gentleman's constituency, as well as the other 500 or so constituencies in England and Wales.

Mr. Dale Campbell-Savours: I welcome the increased money for CCTV and for DNA testing—something that the general public will understand


to be a good investment. Is not the best way to reduce crime to reduce unemployment, which is precisely what we are doing? Is not that why the new deal really works? In the 1980s, when unemployment was rising, crime was rising and, in the 1990s, as unemployment has fallen, crime has fallen. Was not the former Home Secretary, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), probably correct?

Mr. Straw: My hon. Friend is right. As my right hon. Friend the Chancellor has often said, the new deal is not only an economic programme but a programme to reduce crime. One of the encouraging examples that we were shown today in the Medway area was of new deal people being used to fit locks and bolts onto people's houses. Jobs were being provided, which is one way of getting down crime, and the targets were being hardened, which is another.

Mr. Steve Webb: When members of the public voluntarily give DNA samples as part of a mass screening in a murder inquiry, for example, is it the Home Secretary's intention to allow those samples to be retained on a database with the member of the public's consent?

Mr. Straw: Yes.

Dr. George Turner: Does my right hon. Friend agree that the success of his strategy will depend not only on the police, but on the partnerships in which they are being asked to engage? Historically, we have tried to secure efficiency through the inspectorate of constabulary; perhaps we need a body with wider powers if we are to eliminate the discrepancies in efficiency.

Mr. Straw: I agree. That is why I announced today that joint inspections would be conducted by Her Majesty's inspectorate of constabulary and the Audit Commission, so that the other partners in the partnerships against crime are subject to the same rigorous assessment as the police.

Mr. Graham Brady: The Home Secretary rightly said that it is a priority to reduce administration and bureaucracy for the police. What estimate has he made of the additional work load imposed on senior police officers, in particular, by his own crime and disorder legislation?

Mr. Straw: I have not made an estimate. Senior police officers and operational officers throughout the country tell me that they regard the Crime and Disorder Act 1998 as the most important single anti-crime measure to be passed by the House since the war. They wanted it and they are delivering it. I am grateful to them.

Mr. Hilton Dawson: I welcome my right hon. Friend's statement and the 20 per cent. reduction in crime in Lancashire. I urge him to get local partnerships to pay especial attention to the horrendous problem of street crime, which can have the most devastating consequences for its victims and leads to the widespread fear of crime, contributing to the decline of the value of visits to town and village centres and rural centres. Does he agree that street crime is more a matter

for partnerships between local authorities and the police than some other crimes, which require more emphasis on evidence-led policing?

Mr. Straw: Street crime is terrible wherever it takes place and can cause great fear. I know that my hon. Friend is making great efforts with the local authority and the Lancashire constabulary to tackle street crime. Exactly how it is tackled is a matter for the police and the local partnerships but part of the purpose of our crime reduction investment, including in closed circuit television and police targeted hot-spotting, is designed precisely to tackle street crime.

Mr. Owen Paterson: Why has not the Home Secretary implemented the recommendations of a recent internal Home Office report, which clearly stated that the sparsity factor should be taken into account when policing rural areas?

Mr. Straw: Because we said that we would not make changes in the standard spending assessment for three years. I understand the concerns about rural policing. Incidentally, the same concerns about policing levels are felt by hon. Members in inner urban areas, as they always will be. Under the guidance for the bidding for money from the crime-fighting fund for the additional 5,000 officers, we will invite bids that take into account, among other things, the need to improve crime fighting in rural areas.

Mr. Ivan Henderson: I welcome my right hon. Friend's statement on the drug referral scheme. I have in my constituency an excellent drug rehabilitation group, the Open Road. Will such groups be involved in the initiative and will they have adequate funding to help them to help the Government to combat the drug problem?

Mr. Straw: The drug action teams should be fully involved in the crime reduction partnerships, because they are an integral part of tackling drug-related crime, which probably accounts for about half of all acquisitive crime. On the issue of resources, what is crucial in drug treatment—even more so than in policing—is not only the total amount invested, but the need to ensure that the money is properly used to purchase adequate numbers of treatments. The bureaucracy that has grown up around some drug action teams must be broken down to ensure a real and direct connection between the young people—as they are typically—who need drug treatment quickly, and the delivery of that treatment. In some areas, the contracts for drug treatment have been re-let, and twice—or more— the treatments are provided for the same amount of money than before.

Mr. Patrick Nicholls: Does the right hon. Gentleman agree that it will be critical to the success of his strategy—we all hope that it will be successful— that those who are guilty are convicted? Will he, therefore, agree to look again at the rule that states that a jury may not, except in exceptional circumstances, be entitled to know about the previous convictions of the person appearing before them? Was it his experience in the past as a barrister, as it was mine as a solicitor, that sometimes juries look on in stark disbelief when they have


acquitted someone as they realise that he is to be dealt with for offences to which he has already pleaded guilty and for which he has previous convictions? I accept that the Home Secretary cannot revisit that territory immediately, but will he agree to do so, in the context of his strategy?

Mr. Straw: That is one of the most difficult areas of the law of evidence. People's previous character should not be dragged gratuitously into trials as proof of their guilt of the offences with which they are charged. Previous character should be adduced only if it is probative of the offence for which they are being tried. As the hon. Gentleman will know, if a defendant challenges the character of any witness, he has to put his own character in. We have no plans to change the law in that area, and I understand that the Law Commission has considered the issue of character. It may consider it again and, if it does, we shall consider its report. The current rules exist to ensure not only that the guilty are convicted, but that the innocent—including those with previous convictions who are innocent—are not unjustly convicted.

Mr. Vernon Coaker: Is my right hon. Friend aware of the huge frustration in many communities, not least in my constituency, at the failure of the police and local authorities, such as Gedling borough council, to use the anti-social behaviour orders—the parenting and curfew orders—and allow young people to terrorise the elderly and people who live near parks? Will he do all he can to continue to encourage local authorities and the police to use those orders to tackle that blight on our communities?

Mr. Straw: Yes, and I congratulate my hon. Friend on the leadership that he is showing—as I know from my right hon. Friend the Minister of State—in his constituency. It is frustrating, because those police services and local authorities that have used anti-social behaviour orders—or injunctions in respect of social housing tenants—have discovered that they can solve the

problem more effectively than by simply resorting to charging those involved with minor public order offences, and they can save time, and much money, in the future.

Dr. Brian Iddon: I, too, welcome any attempt to connect the drug misuser with responsive treatment services. However, there are long waiting lists of volunteers for treatment at the moment despite what my right hon. Friend has said. Can he assure me that adequate training programmes exist to get enough people in place by 2001 and will he also recognise that up to 50 per cent. of those presenting for treatment are also likely be suffering from mental illness? That is not widely recognised, but if we do not begin to recognise dual diagnosis, the revolving door will merely spin faster.

Mr. Straw: We are investing considerable additional resources in drug treatment and testing, and my right hon. Friend the Secretary of State for Health and I are examining whether that money is well spent. Of course I understand that many of those with serious drug addiction problems—I do not know the exact number—also have problems with mental illness. We must stop such people committing crimes if we are to ensure that they are properly treated.

Mr. Hilary Benn: Will my right hon. Friend remind the police and local authorities that anti-social behaviour orders can be used to deal with anti-social behaviour in privately owned or rented dwellings? After all, if such anti-social behaviour occurred in a council or housing association property, those responsible could be subject to eviction.

Mr. Straw: One reason why we designed the anti-social behaviour orders was because of the concern of local authorities and the police that the avenue of an eviction order was not available, in most cases, for tenants of private landlords. Anti-social behaviour orders can be used to deal with private tenants, owner-occupiers, juveniles over 10, and they do not have to be used as a last resort.

Orders of the Day — Electronic Communications Bill

[Relevant documents: The Trade and Industry Committee reported on the Draft Electronic Communications Bill in its Fourteenth Report of Session 1998–99, HC 862. Its Seventh Report, on Building Confidence in Electronic Commerce: The Government's Proposals, HC 187, and the Government's response thereto, contained in Promoting Electronic Commerce, Cm 4417.]

Order for Second Reading read.

Madam Speaker: I should inform the House that I have selected the amendment which stands in the name of the Leader of the Opposition.

The Minister for Small Business and E-Commerce (Ms Patricia Hewitt): I beg to move, That the Bill be now read a Second time.
When my grandmother left Britain nearly 100 years ago, it took her months to reach Australia, and it took months for her first letter to reach home. These days, a letter takes less than a week, but an e-mail takes less than a minute. That is just one small example of how our world is being transformed by electronic networks.
The Electronic Communications Bill will modernise our laws for the world of e-mail and the internet. It is just part of our strategy to make this country the best place in the world for electronic commerce.
Electronic networks—the convergence of communications and computing—are changing everything. They destroy jobs and create new ones at quite terrifying speed. Already in the United Kingdom, one in six people works for companies that did not exist five years ago. Networks have transformed global trade, creating financial markets in which billions of dollars are moved around the world daily. They are transforming manufacturing, allowing global teams of engineers to work around the world, around the clock, designing new products and testing them in simulation before the prototype is even built. They are transforming education, and they will certainly transform politics. Indeed, I must congratulate the hon. Member for Rutland and Melton (Mr. Duncan) on achieving a parliamentary first—an electronic petition. I am not sure whether the House is yet equipped to receive an electronic petition electronically—I fear not. When I saw the electronic petition in my in-box this morning, and when I saw "You've got mail", I confess that I was not thinking of the hon. Gentleman.
Our goal is clear. This country led the world into the first industrial revolution, and now we are determined to be winners in the new economy. Our strategy for that is also clear. We need modern, competitive markets that will enable the fast growth of electronic commerce; confident consumers with the skills and access to exploit the potential of the internet; and a leading-edge Government, who are exploiting to the full the potential of the new technologies to transform the ways in which we deliver services to citizens and citizens communicate with the Government.

Mr. Dale Campbell-Savours: One of the biggest impediments to the use of the internet in my constituency, where incomes are generally low, is the cost. How can British Telecom retain the right to charge

people at the current level and deny millions of people the access that we believe that they should have, and that is enjoyed by people in the United States of America and other countries? Can my hon. Friend reassure me that the Government are doing something about this? BT will hang on to its profits like grim death and concede nothing unless it is pushed.

Ms Hewitt: My hon. Friend is absolutely right about the importance of reducing internet access costs. I represent a similar constituency, and low-income consumers—indeed, all consumers—can already benefit at weekends and off-peak times from some of the lowest internet access charges in the world. The real difficulty arises with peak-time access. We need to get the costs of that down, and we need tariffs that allow unmetered access. Oftel has made it clear repeatedly that there is no regulatory barrier to that, and it is considering BT's recent proposal for a new wholesale pricing system. Today, Oftel announced a new consultation on the matter of digital subscriber lines in the local loop; tomorrow, it will announce its decision on local loop unbundling, and how it intends to progress on that matter.

Several hon. Members: rose—

Mr. Deputy Speaker (Sir Alan Haselhurst): Mr. Brian White.

Mr. Campbell-Savours: My hon. Friend the Minister—

Mr. Deputy Speaker: Order. I hope that the Minister will assist me. When several hon. Members stand to intervene in her speech, it would help to know to whom she is giving way.

Ms Hewitt: I apologise.

Mr. Campbell-Savours: My hon. Friend the Minister said that there was no regulatory obstacle to getting costs down. However, BT is recognised to be the main provider: it has a real monopoly, and needs to be pushed. Costs will be reduced not because BT volunteers to lose some profits, but because the company will be required by Parliament to do so—even though we recognise that it is a private company. My constituents want the same free, day-time service from BT that internet users in America enjoy.

Mr. Deputy Speaker: I appeal to hon. Members to make short interventions, especially if they are repetitive.

Ms Hewitt: I have already made BT aware of my views, and of the Government's objective in this matter. However, I remind my hon. Friend that BT has to set interconnection charges that are fair. Because of that, prices are already coming down. A wholesaler unhappy with the interconnection price offered by BT can go to Oftel, which will make a determination in the matter.

Mr. Brian White: Is not one of the problems the length of time taken by Oftel to come to a judgment? Can Oftel's investigations be speeded up?

Ms Hewitt: My hon. Friend makes an important point. Oftel is increasingly aware—as are Ministers—of the need to move in internet years, rather than in parliamentary or calendar years.

Mr. John Bercow: In a speech given in Cambridge on 13 September, the Prime Minister said that the Government attach a great deal of importance to getting their policy on e-commerce right. What assessment has the Minister made of the recent survey showing that two thirds of e-commerce companies feel let down by the Government's proposals? What is her assessment of the verdict of Mr. David Grossman, of the distinguished solicitors firm Berwin Leighton, that the industry was "distinctly underwhelmed" by the Government's proposals?

Ms Hewitt: I am extremely sorry that the hon. Gentleman has not been listening to industry, but that is typical of Conservative Members these days. In fact, Bill Gates and Microsoft have already described the Bill as a model for Europe. In addition, Intel, IBM and other major industry players in this country have welcomed the Bill. I hope that the House will do the same.
The Bill will help us to get the market framework right. It will build trust in the authenticity, confidentiality and security of on-line transactions. It will confirm the legal validity of electronic signatures, a matter for which business has pressed urgently. It will enable us to modernise the statute book by allowing the Government to amend references to paper signatures, documents and records—there are about 40,000 such references so far—to include their electronic equivalents.

Dr. Stephen Ladyman: Would it surprise my hon. Friend the Minister to know that the pharmaceutical industry, in which I used to work, has been pressing for that measure on electronic signatures since the mid-1990s? The Conservative Government of the time did nothing about it.

Ms Hewitt: I am grateful to my hon. Friend, who makes exactly the right point. I shall come to the record of the Opposition in a moment. The Bill is the product of extensive consultation, which finally began in the dying days of the previous Administration. In March 1997, the then Conservative Administration consulted on proposals to introduce a mandatory licence scheme for trust service providers, with mandatory key escrow. In April 1998, one of my predecessors, my hon. Friend the Member for Hornsey and Wood Green (Mrs. Roche), announced that we were abandoning the Conservative party's approach. In March, we consulted again on our voluntary approval scheme. In July, we published the draft Bill for further consultation.
At least some Opposition Members have abandoned the view that they held in government. The hon. Member for Esher and Walton (Mr. Taylor) said:
I welcome the fact that the right hon. Gentleman has fileted from the previous draft of the Bill various aspects of the statutory trusted third party regime. I have recanted proposals that I made when I was a Minister".—[Official Report, 19 November 1999; Vol. 339, c. 241.]
He was right to recant because, as he recognises, the policy of this Government has been quite different from that of our predecessors.
The Conservatives wanted a system of mandatory licensing for trust service providers. That was rejected by industry. We have always preferred a voluntary approval scheme. The Conservatives wanted a system of mandatory key escrow that would have required users of encryption to deposit copies of the keys protecting their confidential

data to be lodged with a third party. We listened to business and industry and ruled that out in March. In May, we published a Cabinet Office study that confirmed that partnership with industry rather than mandatory key escrow was the best way to meet law enforcement concerns. Clause 13 explicitly prohibits key escrow requirements being imposed in any order made under the Bill.
Now the Conservatives tell us that they will oppose the Bill until the European Union has sorted out every issue to do with the framework of statutory regulation and private international law. I know that the Conservative party has lost touch with business and is obsessed with the single issue of Europe but, even for it, that is ridiculous. Increasingly, the Tory party reminds me of some of the computer games that our children seem to enjoy so much: Aliens 3, starring the hapless Leader of the Opposition; Quake 2—follow the latest upheaval in the Conservative party as it gets stuck further and further in sleaze; and Tomb Raider—await the return of the right hon. Member for Kensington and Chelsea (Mr. Portillo).

Mr. Andrew Miller: My hon. Friend mentioned Microsoft. Has she seen this morning's letter from its chairman, David Svendsen, congratulating the Government on introducing legislation that will serve as a model for Europe? Does that not contradict the position adopted by the official Opposition?

Ms Hewitt: Precisely so. If British people and British businesses are to win the benefits of electronic commerce, we need this Bill. We were determined to get the Bill right and to get it soon. We will achieve both goals.

Mr. Nick Gibb: Does the hon. Lady really think that she has delivered the Bill as soon as she could have? She said in a press release:
We are determined to get e-commerce law right and to get it in fast.
The Bill was in the Queen's Speech last year, but was not published in its final form during the period covered by it. Does she agree with the Labour-dominated Select Committee on Trade and Industry that the Government have been moving as fast as a glacier on this?

Ms Hewitt: That is a bit rich coming from a supporter of a Government who did nothing whatsoever about the matter until their final weeks. We made it clear that we want the Bill to achieve Royal Assent by next April. I have no doubt that we are on track.

Mr. David Heath: Does the Minister agree that, if regulation is to apply, it must be transparent and justiciable? Will she comment on the case raised by Article XIX in which the Lord Chancellor has closed a website simply because he does not accept that its content is appropriate or suitable? Will she ensure that, if the Government wish to take action against electronic communication, they do so within the law?

Ms Hewitt: I am not aware of the details of the case to which the hon. Member for Somerton and Frome (Mr. Heath) refers. The law applies on-line just as it does off-line; I am sure that he supports that.
I shall return to the European legal framework, but, first, I draw the House's attention to an important change that we have made to the Bill since the consultation draft.


The draft Bill included provisions to modernise the powers of the law enforcement agencies. Those provisions are essential because, unfortunately, the internet is transforming crime as much as it is transforming commerce. It provides new opportunities for money launderers, for fraudsters and for those who trade in child pornography.
I am sure that all Members of the House agree that the police must have adequate powers to deal with such crime. If they have the power—under warrant, for example—to seize a suspect's files or to intercept his communications, they must also have the power, if those files or communications are encrypted, either to obtain the material in plain text or to obtain the key to decipher it.
Those measures were originally included in the consultation draft, but will now be included in the Bill for the regulation of investigatory powers, to be introduced during this Session by my right hon. Friend the Home Secretary and the Minister of State, Home Office, my hon. Friend the Member for Norwich, South (Mr. Clarke). Much of the response to the draft Electronic Communications Bill concentrated on those law enforcement measures. I know that my hon. Friend will consider that response carefully before the investigatory powers Bill is finalised. I also know that he will take into account the concerns of business—especially those of the internet service providers—as to the possible costs to them of those measures. Indeed, I shall ensure that their concerns are effectively and strongly represented to the Home Office. Furthermore, the Bill—like every Bill introduced by the Government—will be compatible with the Human Rights Act 1998. The debate on the Bill will give right hon. and hon. Members ample opportunity to discuss those important law enforcement issues.
The first aim of the Electronic Communications Bill is to build trust among consumers and businesses in the providers of trust services. There is widespread agreement as to the need for a kitemark, so that consumers and business alike can trust the providers of cryptography and confidentiality services. They need to be sure that messages will not be altered en route, that their credit card details will be kept secure and that their signature will not be misused. Our strong preference is for self-regulation, and I am working closely with the Alliance for Electronic Business, which is drawing up a self-regulatory approvals scheme. The alliance has made good progress; last Friday, I received an update, which I am urgently assessing. The proposals demonstrate the commitment of the industry to the self-regulatory approach—companies such as British Telecommunications plc, IBM and Royal Mail are involved.
Our policy is underpinned by the principle of co-regulation, which is especially suited to the world of the internet. Co-regulation means that the Government should define the public policy objectives, but that industry should deliver the solutions through self-regulation.

Mr. David Ruffley (Bury St. Edmunds): Will the hon. Lady tell us when that new regime will be in place? Will she publish a timetable to tell us exactly when it will be finalised and up and running?

Ms Hewitt: During the passage of the Bill, I shall report on the progress made by the Alliance for Electronic Business, and shall try to publish a timetable for the introduction of the scheme.
The point of co-regulation is that legislation should be used only when self-regulation does not deliver. Part I thus provides a statutory default option. In July, we spelt out the criteria for a kitemark for this sector; they include a broad coverage of industry sectors and of its range of services, consumer representation, clear standards and the ability to ensure compliance and to meet EU standards so that British businesses and consumers can take advantage of the single market.
I am confident that self-regulation will work, but the industry is fast-moving, and self-regulation is at an early stage. It would be irresponsible to do what the Opposition appear to suggest—to abandon the possibility of a statutory scheme in future. The sensible course is to work with industry on self-regulation—as we are doing—but to create a statutory default option in case we need it.

Mr. Alan Duncan: By what criteria will the Minister deem a voluntary regime to have succeeded or to have failed?

Ms Hewitt: We have already published—and I just summarised—the criteria by which we shall judge a self-regulatory scheme. Once the Bill receives Royal Assent, we shall hold part I in reserve, in case self-regulation fails. Then, in 2004, we shall conduct an open review of how self-regulation is working; and, provided that it is working well, the powers in part I will lapse, according to the provisions of clause 15.

Dr. Nick Palmer: Can my right hon. Friend confirm that, even if a statutory scheme is introduced, it will still be open to any commercial provider who is not satisfied with the clauses to operate outside the scheme—that it will be statutory in the sense of a Government register but not in the sense of a compulsion?

Ms Hewitt: I am happy to give my hon. Friend the assurance that he wants. We rejected the mandatory approach that our predecessors had adopted, so any statutory scheme, were it to be introduced under part I, would still be voluntary.

Mr. Nick St. Aubyn: Would it not be more straightforward if the Minister, instead of putting propositions before the House now to save her face and that of her colleagues, admitted that her Department had made a mistake and that part I was not needed, but said that it would be possible later, if self-regulation was not working, to come back and justify the introduction of part I on the basis of the evidence available at the time?

Hon. Members: U-turn.

Ms Hewitt: The Opposition are in an extraordinary state. On one hand, we hear that we are not moving fast enough. On the other, we are told, "Do not do this. Find the parliamentary time and introduce a fresh Bill if we need it." It is much more sensible to take the approach that we are taking.
Part II confirms the legal validity of electronic signatures.

Mr. Ian Taylor: I hope that the hon. Lady does not distinguish between me as the


unofficial Opposition and Members on the Opposition Front Bench as the official Opposition in these matters. However, having been the Minister mentioned as having recanted, as it were, may I ask the hon. Lady to clarify two things? First, can she confirm what the Secretary of State for Trade and Industry told me on 19 November 1999—that the Home Office Bill for the regulation of investigatory powers will not override her desire for a voluntary system? Secondly, can she confirm that the Government, in their dealings with business and consumers, will not adopt a key escrow system? If they do, it may well become the de facto system that others will have to adopt.

Ms Hewitt: It is a pleasure to hear from the unofficial Opposition, and I am happy to reassure the hon. Gentleman on both the points that he raises. There is no suggestion of the Home Office, in its Bill, taking over the self-regulatory scheme that we are pursuing with the Alliance for Electronic Business or seeking to substitute its own powers for the statutory default powers in part I.
I repeat that mandatory key escrow has not been part of the Government's policy since March 1999. We have ruled it out from the Bill so that it cannot be introduced under part I or part II. Part II deals with the conditions on which electronic transactions may take place between Government and the citizen.

Part II—

Mr. St. Aubyn: On part I, what assurance can the Minister give the House that if, at some time before 2004, she conducts a review of how self-regulation is working, she will not at that stage have to introduce amendments to the Bill in the light of the fast-changing scene that we all know is represented by e-commerce?

Ms Hewitt: In a world that is changing rapidly, we have to try to make the legislation that we pass today as flexible and future-proof as we can. That is why the Bill is drafted on the basis of technological neutrality. It is not designed to prescribe, or to surround with conditions, any specific type of technology. That is very important in relation to the provisions in part II that will confirm the legal validity of electronic signatures.

Mr. Gibb: Will the Minister come to the House if she decides to invoke part I or will it be invoked through an order? Will the House have any say?

Ms Hewitt: I am happy to assure the hon. Gentleman that I would, of course, come to the House in those circumstances.

Mr. Gibb: Will the Minister give way?

Ms Hewitt: I shall give way one last time.

Mr. Gibb: The Minister has missed the point. As currently drafted, if part I is invoked, the Bill does not require a statutory instrument to be introduced under

either the affirmative or negative resolution procedure. What assurances can she give the House that it will have a say and a vote on whether part I is invoked?

Ms Hewitt: I have just given the hon. Gentleman an assurance in what I thought was plain English.

Mr. Duncan: It was ambiguous.

Ms Hewitt: It was not ambiguous. If the hon. Gentleman wants to pursue the point in Committee, I am sure that we can spend many a happy hour on it.
Part II also gives Ministers the powers to update the statute book by providing electronic equivalents to paper signatures, records and documents. Lawyers argue about whether electronic signatures would be recognised as valid by the courts, but we cannot afford to wait while lawyers argue and the courts decide. Instead, clause 7 will allow businesses and consumers to have confidence in electronic signatures, because it puts beyond doubt that a court can admit evidence of an electronic signature and a certificate in support of that signature not only to establish from whom the communication came, but to establish the date and time at which it was sent and whether it was intended to have legal effect.

Mr. Tony Baldry: Will the Minister help the House by explaining when clause 7 will be implemented? What is the timetable?

Ms Hewitt: I anticipate that clause 7 will come into force immediately that the Bill has secured Royal Assent. I think that the Select Committee on Trade and Industry, of which the hon. Gentleman is a member, particularly supported this measure.
As some of my hon. Friends have said, the proposals for electronic signatures have been widely welcomed by industry. For example, Intel said that it was
delighted that government … is focusing on the real issue of legal recognition of electronic signatures which will give a vital boost to business and consumer confidence".
We also have to modernise the statute book to enable electronic transactions between citizens and government, and between citizens themselves, to take place. Clause 8 will therefore give the Government and the Scottish Administration the power to sweep away obstacles in existing laws that insist on the use of paper and formalities, such as sealing and—if my hon. Friend the Minister for Competitiveness will forgive me for mentioning it—the requirements to deliver documents through the post. The clause will give people the option of using electronic means when they prefer to do so.
I am pleased to announce that my right hon. Friend the Minister of State, Cabinet Office has agreed that the Cabinet Office's central information technology unit will now co-ordinate the use of that power to ensure the equivalence of electronic and paper ways of doing business with government. We want Departments to use those powers quickly, and the Cabinet Office will lead the drive across government to ensure that that happens.

Mr. Ian Taylor: I am grateful to the Minister for giving way twice to me. Can she assure me that there will be consistency across government in putting those powers


into practice? Will the Inland Revenue and Customs and Excise join everyone else, or will they devise their own systems?

Ms Hewitt: The hon. Gentleman makes an important point about the need for consistent and open standards across government and the Cabinet Office will certainly continue in that co-ordinating role. The Inland Revenue and Customs and Excise have already taken the power in the Finance Act 1999 to conduct their own modernisation of their relevant statute book. I am delighted that the Inland Revenue will shortly offer on-line tax filing for businesses and individuals as will Customs and Excise for VAT filing.
The Department of Trade and Industry will use the power that we shall obtain under the Bill to amend company law, so that companies can communicate electronically with shareholders and so that shareholders can lodge proxies, including voting instructions, on-line. Such measures will save the companies and shareholders that take advantage of them significant sums of money. I therefore propose to publish a draft order for consultation early in the new year, so that it can be introduced and take effect as soon as the Bill receives Royal Assent. I shall announce other plans to make use of clause 8 powers during the Bill's parliamentary passage.
Part III modernises the out-dated system for modifying telecommunications licences. There is widespread agreement in the industry that a more flexible and responsive approach to licence modification is essential. I have to say, however, that the industry was unhappy with our proposed mechanism, particularly the proposal that the Director General of Oftel should be able to make modifications without a reference to the Competition Commission, despite objections, provided that those objections did not constitute a significant minority. Following our discussions with the industry, we have considered that proposal further and decided not to proceed with the "significant minority" concept.
We are continuing to discuss possible alternatives with the industry. As I informed Opposition Front-Bench Members earlier this afternoon, I should like to make it clear that I will table amendments in Committee to simplify our proposals and ensure that they command wider support.
We have to get right our own legal framework, and we are doing so, but we also have to get right the European and global frameworks, and we are working to do that too. There is a very big prize to be won in the European Union—a single market for electronic commerce. Tomorrow, at the European Union Telecommunications Council, we shall adopt the electronic signatures directive. That sets out a legal framework for EU-wide recognition of electronic signatures, the establishment of approval schemes for service providers and the liability of providers. We are anticipating the directive in the Bill, and I am surprised that the official Opposition have not congratulated us for doing so, instead of carping in their amendment.
The next priority is to complete the electronic commerce directive. As drafted, the directive enshrines the principle of the trader's country of origin. In other words, a British company complying with British

regulation should be able to sell on-line to consumers in any other member state. We believe that that is the right way to legislate for electronic commerce.
Over the past year, the Brussels convention has been under review. As hon. Members will know, that convention governs the issue of which court can hear a private law dispute between residents of different member states, including disputes about certain consumer contracts. The European Commission has now prepared a proposal to convert it, with amendments, into a community regulation.
The Brussels convention has existed for 31 years and, in that time, almost no consumer has used it to sue for breach of contract. None the less, the Commission sought to extend its provisions to electronic commerce by providing in a draft recital that any website that could be accessed from another member state would thereby qualify as advertising directed at consumers in that member state and could activate the convention's provisions. That, of course, misses the point that, on the internet, any website is, by definition, accessible from anywhere else. I am pleased to be able to tell the House that there is growing agreement among member states with our view that the new recital should be dropped.
We anticipate review next year of the Rome convention, which deals with the issue of which jurisdiction takes effect in private international law. We shall play a full part in those discussions, but we cannot possibly wait until they are resolved to introduce the electronic commerce directive or the Bill. Instead, we need to put forward our own proposals to ensure effective protection of consumers in the world of e-commerce.
It is consumers, above all, who stand to benefit from e-commerce. Price transparency will be a boon to consumers throughout the European Union and beyond. I welcome the fact that at least one leading car manufacturer has already announced that it will sell its own models on the internet throughout the European Union, and I know that others are planning to follow suit.

Mr. Derek Wyatt: This is a terribly interesting issue. Where will European, American and Japanese car manufacturers pay corporation tax and VAT? Is there a European understanding of how that will work with sales on the internet?

Ms Hewitt: My hon. Friend raises an extremely interesting point. I refer him to an excellent discussion paper on that subject, which was published by the Inland Revenue last Friday. In any case, there is a clear set of EU rules governing VAT liability. Those have not given rise to problems as they have been translated into the sphere of electronic commerce.
We have to ensure that consumers are protected from unfair dealing on the internet; they need to know which suppliers they can trust. That is why we are working with consumer groups to develop TrustUK as a hallmark, to ensure that consumers are given clear and fair contracts, truthful advertisements and clear and accurate information about what they are buying, prices, delivery costs, the returns policy, and so on. We can now work with our


European partners to create a TrustEurope equivalent, building on the provisions of the new distance selling directive.

Dr. Palmer: Will the kitemark be available to companies based elsewhere that want to operate within the European Union, or will it be restricted to companies based within the EU, initially within the UK?

Ms Hewitt: We envisage that the TrustUK mark will be available to companies that sign up to approved codes of practice that provide both proper consumer protection and effective alternative means of dispute resolution. The issue is not where the company is based, but whether it offers proper consumer protection through an effective code of practice and effective dispute resolution mechanisms.
The Bill will be Britain's first 21st century law. It was the first Bill referred to in the Queen's Speech; it was the first to be introduced; and, tonight, it will become the first to receive Second Reading. It will bring our statute book into the 21st century, provide a sound legal basis for electronic commerce and electronic government, and help to build consumer and business confidence in trading on the internet.
The Conservatives' opposition to the Bill provides further evidence of how out of touch and out of date they are. While they remain stuck in sleaze, we shall legislate in the interests of the country as a whole. While they are stuck in the past, we shall legislate for the future. I commend the Bill to the House.

Mr. Alan Duncan: I beg to move, To leave out from "That" to the end of the Question, and to add instead thereof:
this House declines to give a Second Reading to the Electronic Communications Bill because it introduces a completely unnecessary element of regulation in the supervision of electronic commerce which will damage the United Kingdom's lead in this field and because no proper consideration has been given to the manner in which United Kingdom law will interact with impending EU law, in particular with regard to the jurisdiction that will govern electronic trade.
I should do the House the courtesy of drawing its attention to my interest, which is fully registered in the Register of Members' Interests.
We are dealing not with some sort of techno-fad but with an important matter that increasingly affects the lives of millions. We are in the middle of a fantastic technological revolution and the Opposition accept the need for an element of legislation to facilitate that revolution's advance. Britain has a golden opportunity to put itself well ahead of the game, but the Government's slow handling of the issue risks relegating us from the premier league to the second or third division. There is a strange division between those who, faced with that revolution, champ at the bit and those who remain completely bamboozled. The revolution offers information, communication and trading networks, but the Bill is primarily concerned with the third category—electronic commerce.
E-commerce is a much misunderstood term. Despite forest-loads of hype, many outside the world of information technology retain a vague notion that e-commerce has something to do with selling books and CDs over the

internet and with dull brochures and junk mail served up on screen instead of posted through the letter box. The commercial internet is still in its infancy, but it is growing prodigiously. Only six years ago, Europe was considered an internet backwater, with a mere 200,000 computers connected to it; now, 50 million Europeans are believed to be connected. The "Computer Industry Almanac" predicts that, by the end of 2000, 327 million people around the world will have internet access. It is forecast that that dramatic increase in the number of people on-line will lead to an explosion in global e-commerce revenues: one report estimates 183 million on-line buyers spending more than $1 trillion by 2003.
Impressive as those figures are, I would argue that they partly miss the point about what e-commerce is. It is not only about massive numbers or about who is or who is not making a profit on-line. It is about how this fledgling technology can transform entire industries and enable companies to reach markets that were previously unattainable. It is also about saving money by moving core business processes on-line, such as customer service, shareholder communication, procurement and supply-chain management. Above all, it is about creating and experimenting with new business models such as Priceline, which lets consumers suggest their own price for everything from new cars to holidays and mortgages, or about computer companies that allow customers to configure their own personal computers on-line and use sites that offer direct access to the travel industry's computer database.
E-commerce is also about the way in which companies re-engineer their businesses. Encyclopaedia Britannica International Ltd, no longer employs salesmen to lug heavy tomes from door to door. Instead, it sells student subscriptions to its multimedia website to colleges and universities around the world.
Britain can and must be the nerve centre of the worldwide business revolution. This is a world in which there is a mini revolution every week. British businesses will not forgive us if we do not act fast and with a clear head. [Interruption.] In one respect the Government seem to support the same objective—they talk as though they share that objective. As in so many other areas of policy, they have adopted convincing language. In his speech at Cambridge, the Prime Minister said that
we need to be quick on our feet.
Some might think that he has been quite busy off his feet recently. However, the Government have not been quick off their feet because the Bill has been a very long time coming. Anyone who has paid any attention to the progress of the Bill knows that it has been the product of a messy turf war between the Department of Trade and Industry and the Home Office, which have been squabbling for more than two years. The Bill was promised last year but it never came.

Dr. Ladyman: Perhaps the hon. Gentleman will enlighten me by explaining how his call for more speed ties in with an amendment that calls for less speed.

Mr. Duncan: The reasoned amendment calls for less legislation. It was completely misrepresented by the Minister when she said that the Opposition are calling for nothing to be done until everything has been done in Europe. Rather, we are saying that Britain should proceed now, but in a simple way with a shorter Bill that is not so cumbersome and laden.
It is the Government who have taken their time. They have said for years that they will appoint an e-envoy. At last they have got round to doing so, but he will not be at his desk until January.

Mr. White: If the hon. Gentleman is so concerned about speed, why did not the Opposition agree to a carry-over motion in July and table amendments in Committee? Their objective could have been achieved in that way.

Mr. Duncan: I shall specifically address that issue.
It is hardly surprising that the Government have been so slow. Although they talk much about IT and about how they believe in it, their track record in implementing it in their own house is abysmal. Much of what they try to do in government immediately crashes.
The essence of the internet revolution is that it divides clearly into e-government and e-commerce. The internet is a fantastic mechanism for improving the delivery of government. That is certainly what the Government say, but in practice everything that they touch crashes. About 500,000 people had to wait for a passport in the summer because computers would not work. The Inland Revenue could not properly implement its new system of self-assessment, and a crash led to the absurdity of 56,000 people receiving an apology for being sent the wrong sort of threatening letter.
The Government may speak the language of IT, but in practice their IT crashes. As if that were not enough, they set themselves a target. In 1997, the Prime Minister pledged that 25 per cent. of Government services would be available electronically by 2002. An inter-departmental audit of Government dealings soon afterwards found that 38 per cent. of them were already capable of being conducted electronically. Perhaps the Government think that a target that takes them backwards is easier to achieve.
Worst of all, the Government, pretending that they favour IT and the great internet revolution, plan to introduce IR35—a £500 million e-tax that would drive people abroad. The supreme irony is that those who helped to create the technology to produce the e-signature for which the Bill provides will face a sustained attack from a Government who say one thing and do another.
The Minister was kind enough to refer to the e-petition that I electronically signed this morning. We started it on Friday and we had thousands of names by Sunday evening. Many more thousands came in today, at the rate of one every five seconds at its peak. This is the first electronically signed petition. I look forward to the electronic reply, which I trust the Minister will send in due course.
The Secretary of State, however, is a little slow off the mark. As I walked into the Chamber this afternoon, I saw on the board a press notice informing us that in a week the Secretary of State will become the first British Cabinet Minister to become a digital signatory. He is a little behind the times, and in internet time a week is a decade.

Ms Hewitt: I am grateful to the hon. Gentleman for giving way. As he has collected so many signatures on

the subject of IR35, will he tell the House whether he believes that an IT subcontractor earning £18,000 a year should pay the same level of national insurance contributions as a nurse or a teacher on £18,000 a year, or whether, as some—some—who wish to evade tax would suggest, that person should be able to escape paying any national insurance contributions at all?

Mr. Duncan: The Minister knows perfectly well that those who are employed as a limited company are doing so legally and that she is replacing their ability to help Britain lead the internet revolution with a £500 million tax, which will be detrimental to Britain's future and to theirs.

Several hon. Members: rose—

Mr. Duncan: I give way to the hon. Member for Broxtowe (Dr. Palmer).

Dr. Palmer: On a point of order, Mr. Deputy Speaker. I came to the Chamber in the belief that we would be debating electronic communications and commerce. We seem to be debating tax. Is that in order?

Mr. Deputy Speaker: I have heard nothing out of order so far.

Mr. Duncan: It seems that the Labour Government are about to add insult to injury. According to The Independent on Sunday, not only are they driving thousands of people out of Britain by taxing them more, to the tune of £500 million, but it seems that they are to give visa exemptions so that people from overseas can come into Britain if they can add to the IT revolution. How does the Minister square kicking people out with bringing them in with special exemptions?

Mr. Mark Todd: I thank the hon. Gentleman for giving way. Would his party reverse the change if it were in government?

Mr. Duncan: I am sure that, unlike the Labour party, we will stick to what we say in the run-up to an election.

Mr. Campbell-Savours: rose—

Mr. Miller: rose—

Mr. Duncan: I shall give way in a moment, but I want to make some progress.
The Government have been unable to get their house in order and have made a complete hash of e-government. In contrast, our approach to e-commerce is entirely clear. We believe in minimum interference.

Mr. Miller: Before the hon. Gentleman leaves the issue of the petition, will he confirm that the website from which the petition was derived has been up and running for several months, and that it is not the instantaneous vehicle that he claimed? Will he answer the question from


my hon. Friend the Minister? What would he do about the national insurance contributions of IT contractors on £18,000, as opposed to those of nurses on £18,000?

Mr. Duncan: I am happy to confirm to the hon. Gentleman that we collected all the names over the weekend.

Mr. Miller: Rubbish.

Mr. Duncan: I defy the hon. Gentleman to disprove me. We announced the petition on Friday and received 1,700 signatures over the weekend and a further 2,000 this morning, witnessed by many people. Even in the 20 minutes during which I held a press conference this morning, a further 387 signatures came in.

Mr. Campbell-Savours: rose—

Mr. Duncan: I will not give way to the hon. Gentleman.
The Government invited us to allow the e-commerce Bill, as everyone believed it was called, to be introduced in the last Session and carried over. We rightly refused because we were not prepared to aid and abet the passage of a dog's dinner of a Bill, which would have been burdensome and detrimental to the progress of the revolution that we support. We knew the Bill's main contents and we were not happy. At least we thought that key escrow had been rejected and I was pleased to hear the Minister confirm that today. However, only a few groups were adequately consulted in a secretive, cosy process. The Minister shakes her head, but the Government did not properly consult small, infant companies, which are at the cutting edge of the progress that we support. The consultation process concentrated on the larger, established companies.
We forced the publication of the Bill in July; the Minister was not prepared to publish it. All companies, large or small, had the summer in which to consult the Government only because we refused to allow the carry-over procedure, and demanded the Bill's publication. Our efforts gave them that opportunity.

Ms Hewitt: I am surprised that the hon. Gentleman has chosen to reveal discussions that took place through the usual channels. However, as he has done that, I emphasise that we published the draft Bill for consultation because we believed that that was the right way to proceed. We made it clear that we wanted to introduce the Bill; we published it and we have now introduced it.

Mr. Duncan: I mentioned the matter only because it was raised during the Minister's speech. I am puzzled about how the Minister could have published the Bill for consultation if she had already laid it before Parliament. We forced its publication. Interforum, which probably represents the largest group of companies in the sector, stated:
Although the consultation document is titled 'Promoting Electronic Commerce', some of the provisions in it could actually put the UK at a competitive disadvantage.

At that stage, Interforum said what we were saying:
We advocate a simple e-commerce Bill containing part II," —
the provision for electronic signature—
a four-page Bill genuinely designed to help the development of e-commerce in the UK.
It continued:
Far from promoting the UK as the best place on earth to trade electronically, the Bill is dominated by provisions which will make it more cumbersome to set up services in the UK, rather than elsewhere.

Mr. St. Aubyn: Does my hon. Friend agree that if the Government had presented a short Bill in the summer, it would have been relatively easy to have got it on the statute book already?

Mr. Duncan: My hon. Friend is right. If the Government had done as we requested, and presented a short, simple Bill, it could have been close to being enacted by now. However, the Bill that they published for consultation caused many anxieties, especially about the extent of the powers of intrusion, which would have been granted under part III of the draft Bill. Only a few weeks ago, I argued from the Dispatch Box that part III should be removed. The Minister looked across the Chamber and scoffed at me as if to say that that was an absurd demand. However, in my typically tactful fashion, I demanded its removal again. Now, lo and behold, part III has evaporated. The Government accepted the Opposition's sensible, constructive demands. The Minister relented and part III has been removed. We backed business; business backed us; the Minister backed down.
Part I remains a mess. We believe that the industry is best equipped to set standards, and that it can be relied upon to do so. We do not need Government interference in the process.
Part I is confusing and muddled. It is part statutory, part voluntary and, during the Minister's speech, the hon. Member for Broxtowe (Dr. Palmer) described the absurdity of companies not being compelled to participate, should its provisions be invoked. It is not needed at all. Indeed, the measure, which is part of a Bill for a fast-moving sector of the economy, is designed not to be used. It is designed as a dodo—it will lie on the statute book, extinct. She hopes that she will never have to invoke it, but, even today, has been unable to say under what criteria she might decide to invoke it.
The whole point of part I is that it is bound to be overtaken by events and rendered obsolete by technological advance. At least there is a sunset clause, but I suggest that it would be better to invoke it now and not have part I at all. The Minister will perhaps have seen from her own mailbag—as I certainly have and many other hon. Members will have today—that the Law Society recommends the total removal of part I.
The Bill contains some unsatisfactory elements. There is, lying within it, the prospect of a completely new regulatory office. Will it be called Ofcrypt or Ofweb? Who knows, but provision exists for detaching control of the regulatory regime from the Minister and passing it to some new body designed to regulate the internet. The last thing that the internet needs is an interfering regulator.

Mr. Wyatt: If Britain is to be the fastest-growing e-commerce country, is not it important that consumers feel confident about how we trade on the internet? If there


is to be not a statutory body but a partnership with the internet community, we in the House have to enable that to happen so that consumers can feel confident about using websites. If we do not do that, they will not use them.

Mr. Duncan: No such interference is necessary when there are so many well-established companies connected to the internet that can set their own standards and prove to consumers that they are worth using. The Government do not need to interfere and the partnership to which the hon. Gentleman refers would simply lead to them slowing the development that we want. Indeed, because it has taken them two years to produce the Bill, those companies are already being dragged back in a way that, otherwise, they would not.

Dr. Ladyman: I am grateful to the hon. Gentleman for giving way to me a second time. When he reads what he has said, I wonder whether he will realise that he has proposed a policy that would exclude all new and small companies from using the internet as a way of trading. He is saying that the only firms in which people should have confidence are existing reputable businesses. Surely he cannot seriously be telling us that.

Mr. Duncan: The hon. Gentleman wilfully misunderstands me. Plenty of companies are already established in the industry and they could set up a voluntary regime in which all could participate. The Government do not need to interfere—they would be a brake on progress. Indeed, the whole point of part I—even to the Minister, as she would say—is that it is designed not to be used. I am merely pointing out the absurdity of including a provision that is designed not to be used and, I hope, never will be.
The kernel of the Bill is part II—Provision for electronic signature, which is all that the industry needs. It wants to know that there will be a proper legal framework within which a person can contract with another and that the contract will stand up in law. As the Minister rightly said, in many examples a handwritten signature is required—in many cases, it must be witnessed by someone else—but as the world advances it should be possible to achieve such verification and signature electronically. That is what the industry needs, and that is all that it needs, which is why we would have fully supported, even in the previous Session of Parliament, an e-commerce Bill that provided for electronic signature.

Dr. Palmer: As I understand it, the hon. Gentleman believes that, at this stage, we should not provide for a statutory register, no matter how disastrously a voluntary scheme might fare. He admits that we are in a new area. Does he think that past precedents—for instance, on BSE, which was caused by a similar lack of regulation—are encouraging?

Mr. Duncan: The Minister has just said that she is confident that self-regulation will work—so am I. I am pleased to find common ground with her. We could expedite the passage of the Bill if she would base her thinking on the comment that she made, and proceed with the Bill without this unnecessary provision, which will be a brake on progress.
Everyone recognises that part III is a bolt-on extra. Any provision that is retrospective, as the amendment of telecommunications licences would be, gives cause for concern. We reserve judgment on that. What matters is that existing licence holders are not disadvantaged. I am grateful to the Minister for explaining to the House that she will consult more widely and that she intends to remove some parts of the Bill in Committee. We are getting nearer to the four-page Bill that we would like.
A broader issue that affects not only this Bill but others is the language in which it is drafted. Any hon. Member who reads it from cover to cover will see that some parts of it are pretty incomprehensible and unintelligible. It is not an easy Bill to understand. As legislators, many of us would like our style of legislative language to be made simpler.

Mr. White: indicated assent.

Mr. Duncan: I see that the hon. Gentleman agrees. Legislation in Australia and the United States is in much simpler language. A sentence such as
the enactments relating to the functions of that body or office shall have effect as if the functions of that body or office included the functions specified in the appointment
makes us wonder how people reading the Bill will know the rights and wrongs of what they plan to do. I hope that I shall have support from both sides of the House if I join the Campaign for Plain English on the drafting of our law.
There is also concern about the loose and extensive nature of the secondary powers that the Bill grants. Many of them are vague and ill-defined. Some broad and unspecific matters are left to the Minister's whim. We shall consider that in more detail in Committee, but it is a point of principle that the secondary powers granted in the Bill go too far. Bills should be written in simple language. As my hon. Friend the Member for Banbury (Mr. Baldry) said, it is a matter of principle that hon. Members will want to scrutinise anything that emerges from the Bill, particularly something as significant as whether to introduce a voluntary regime—although it is fair to say that, under the Bill, that matter would have to come before the House in a statutory instrument.
Another area gives cause for concern. I am not saying that we should not proceed until everything is agreed in Europe—quite the opposite. I believe that we should proceed rapidly in the simplest possible form, while keeping more than an eye on what is happening in Europe. I detect an element of confusion in the Government about how they will handle European legislation. I welcome what the Minister said about the nature of the directive, which was that the country of origin of the sale shall be the jurisdiction of the law that will govern the transaction. She also said that there is great pressure in the European Union for a different code to govern internet transactions.
There is much confusion. As the Minister knows from what I said to her in European Standing Committee C, I am concerned that she and her fellow Ministers in the Department of Trade and Industry are saying one thing, but her colleagues in the Lord Chancellor's Department are saying another. We will not tolerate it if a small or even a large company in Britain that sells goods over the internet to another country is suddenly subject to the law of that country unreasonably.
The position becomes all the more confusing when geography becomes less and less significant, because the same person can plug in, wherever he is in the world,


and enter into a contract via his laptop. Where that contract was executed must be clear, and the arrangements must be fair. I am glad that the Minister is going to press for the European Union recital to be dropped, and I hope that she will report to the House when she has been successful.
Our position is straightforward: we want a short, simple Bill. We do not believe that part I should be in the Bill. We believe that part II is the kernel of the Bill, and is essentially all that is needed. We believe that part III must be watched very closely, and we will ensure that there is no unfairness among existing telecommunications licence holders. If the Minister prunes the Bill and prunes it sensibly, making it a short, sharp, effective measure for the benefit of those who want to trade electronically, we will support her; but if she introduces other burdens that prove to be a drag anchor on such progress, we will oppose her.

Mr. Andrew Miller: In my brief intervention on the speech of the hon. Member for Rutland and Melton (Mr. Duncan), what I was trying to say about IR35 was that anyone with an ounce of technological know-how would have worked out how to generate that kind of signature response in a few days. If the Conservative party had not got that far in its use of technology, woe betide it. All the names have been in the public domain for several months, following a web campaign on the subject. I agreed with the hon. Gentleman on one point, to which I shall return later.
The language in which the Bill is drafted reflects a broader weakness in the way we conduct our legislative arrangements in spheres in which technology is driving our thought processes.
For the benefit of hon. Members who have not yet experienced the web, let me illustrate just how powerful the tool might be. Last night, when reading the paperwork relating to the Bill, I thought that it might be fun to pick a name at random from the list of Opposition Members to demonstrate the power of the web in accessing information. It took me a few minutes. There was a list under "A"; I used an old piece of technology, the pin, which identified the word "Aldershot". I then looked at the web connections relating to the hon. Member for Aldershot (Mr. Howarth). I have put a note to the hon. Gentleman on the board, telling him that I was going to raise this.
The local website for the hon. Gentleman's council—a very good website: www.hart.gov.uk—tells us that the local MP has joined a
War on Waste with a pledge to compost his garden waste at home.
There are instant connections, not from there but through a search list under the hon. Gentleman's name. The website of The Freedom Association, of whose council the hon. Gentleman is a member, is www.tfa.net, and that linked me, via a number of extraordinary areas, to a site that is partly in the public domain and partly an e-commerce site. It showed, at the heart of the search for that one name, a company called Astra Holdings.
Those of us who have been in the House for some time will remember all those areas, but the exercise showed the power of this research tool. It can link areas of work that we have never been able to link by any other means.
The hon. Member for Rutland and Melton started his speech in a way that we all find ourselves forced to do in the context of the web. We see asymptotic curves, talking about billions of dollars of potential commerce, processing power, or take-up of the web. All that may be a little hackneyed, but it is true. The problem that we face is legislating on something that is moving so rapidly. No hon. Member can do more than guess at the scale of the growth of e-commerce over the next 10 years. The phenomenon equally applies in other areas of scientific and technical evolution. In my short time here since 1992, those developments have included digital broadcasting—I served on the Bill that provided the framework for that—and human genetics, on which the Select Committee on Science and Technology, of which I used to be a member, worked. Like the information technology revolution, such developments are moving so fast as to render legislation potentially out of date before, with the greatest respect to my hon. Friend the Member for Milton Keynes, North-East (Mr. White), the ink is dry on the vellum.
In the case of e-commerce, the Government have tried to use the collective wisdom of the nation by publishing a draft Bill, a procedure that the House should use more often. In sectors such as electronic communications, I commend to the House the use of witness examination at the Committee stage, so that, at the point of coming to detailed decisions, we are as up to date as possible about the technologies that impact on us. That will not solve the problem of keeping up to date, but it will at least give us an opportunity to be up to date on Third Reading.
I recommend that the Government avoid something that happened in several sectors under the previous Administration. The hon. Member for Rutland and Melton referred to procurement processes. The biggest weakness in those procurements was that they were technology-based, rather than designed to provide solutions. When looking at technologies, we need to use the best brains both in industry and in academia to deal with the impact of generic technological evolutions, rather than to focus on particular boxes.
To a certain extent, the Bill achieves that. I congratulate Ministers on their foresight and on the way in which they have addressed some of the difficult problems, but I make some observations on what is not in the Bill, rather than what is. I shall not stray too far because I know that you, Mr. Deputy Speaker, would want me to concentrate on the content of the Bill.
It is clear that we will have to come back to some of these issues, but it will be at the expense of Great Britain plc if we are not careful and do not get things right first time. Just remember those asymptotic curves that I mentioned earlier—the Bill is about how fast we will get to the near vertical slope predicted. If we get it wrong, who knows what disadvantage we will create for businesses in the United Kingdom.
The next point is specifically targeted at the little Englanders among Conservative Members. Without international agreements and partnerships, we might as well pack up now. The growth of e-commerce will be more important at the next GATT and World Trade Organisation discussions than the price of Canadian wheat ever was. Perhaps that is not a profound statement today, but few hon. Members accepted it when I made that prediction five years ago.
Essentially, the main principles of such international agreements should be no different from those on which all trade works: trust. All good trade works on the basis of that. If the hon. Member for Rutland and Melton and I decided to enter into an agreement with each other, I suspect that the degree of trust would be limited. I would want to see his goods; he would want to see my money. As trade develops, trust is increasingly built into the relationships. We currently use intermediary vehicles such as credit cards to help us establish those processes. We need to make it possible for electronic signatures to be used for verification. The nations that move furthest and fastest on that will be in a position to succeed.
Ideally, the codes to provide vehicles for trust should be established on a voluntary basis, but if that fails they will have to be statutory. The relationships involved will be a 21st century mail order protection scheme. We need to establish that principle worldwide. Hallmarks such as TrustUK, which my hon. Friend the Minister for Small Business and E-Commerce mentioned, will give the individual or trade consumer confidence that their goods will be delivered on time and at the agreed price and quality and will give the supplier confidence that the money will arrive on time, to the correct value and in the right currency. Nation states have an interesting role to play. The complex question of taxation has been mentioned and needs to be considered carefully.
Self-regulation can work and I believe from my discussions with industry that the will exists to deliver it.
Part I of the Bill deals with cryptography. The Government were right to rule out a mandatory key escrow, not least because it is the most unintelligible phrase ever to appear in the House. I suspect that very few people here, let alone outside the House, could explain what it meant. I hope that the Conservatives will look a little beyond the horizons of the green Benches to consider the interests of Great Britain plc and will support the principle that we have adopted. We need to send out a gentle warning to all our industrial partners. It would clearly be improper for any company that is a provider at any level to stand in the way of the legitimate needs of the police and criminal investigation authorities. Such companies should remember that their shareholders have children who are targets of paedophiles and drug barons. Of course industry should try to remain on the leading edge, and we want to help in that, but companies should not forget their responsibilities.

Mr. Richard Allan: I sympathise with what the hon. Gentleman says about responsible cryptography providers co-operating with law enforcement agencies, but I hope that he is not suggesting that part I is about law enforcement. My understanding is that nothing in part I should be related to law enforcement, because those issues are to be dealt with in another Bill.

Mr. Miller: I am referring to the context of the Bill as a whole. I take the hon. Gentleman's specific point, but in the general picture, while we give British companies and players in the field the advantages of being on the leading edge, we must send out a gentle warning that their shareholders also have children who are targets of those to whom I referred.
Criminals will continue to exploit the net. I gave away some web addresses earlier, but there are others that I am not going to specify. I did a search a few years ago in the wake of the awful Oklahoma bomb, when it was suggested that white supremacists were involved. Some of the information that I uncovered in the public domain on the web was outrageous. I do not think that any Member of Parliament would associate himself with some of the views that I unearthed. It is up to society as a whole to decide where the line is drawn and it is up to all of us in the House and outside to bring to book those who cross it.

Mr. Ian Taylor: There is too much confusion about the key escrow system, which is often associated only with the problems of the Home Office trying to track criminals. Key escrow, public-private key infrastructures and the use of asymmetric cyphers are all valuable tools for industry for purely commercial reasons. When I introduced a mandatory key escrow system, there was a lot of industrial support for it. Time has gone on and I have already recanted—I do not have to keep doing it. However, we should not talk about criminality every time that key escrow is mentioned. We also have to understand the serious commercial interests involved.

Mr. Miller: I have a great deal of respect for the hon. Gentleman's judgment on many of these issues.

Mr. Wyatt: He should come and join us.

Mr. Miller: There are several issues on which the hon. Member for Esher and Walton (Mr. Taylor) should come and join us, not the least of which is Europe. I take his point that we should not automatically link key escrow simply with issues of criminality. There are broader issues involved. His point is well made.
Part II deals with electronic signatures. I am not a million miles adrift from the hon. Member for Rutland and Melton—for once—in seeking an assurance that the nature of the signature required by any parties to a contract will be driven by the needs of the parties, not simply by the needs of the state. The state clearly has a legitimate role through its various agencies, but just as parties to any civil contract have arrangements that are acceptable to them in pen and ink—or whatever other vehicle they use; perhaps a shake of hands—the state should not seek to interfere in the process, but should aid it by helping to set standards and directing people to where such standards can be found.
The reasoned amendment says that we should decline to give the Bill a Second Reading
because it introduces a completely unnecessary element of regulation in the supervision of electronic commerce which will damage the United Kingdom's lead in this field".
The only aspect of that on which I agree with the hon. Member for Rutland and Melton is that the United Kingdom has a lead in the field. We have that lead because the Government's general policy has helped to build a framework that assists such development. That is adequately recognised in several large company responses to the proposals. Dell—a company that I hold in high regard—says in its submission:
Dell welcomes the Government's decision to move away from the use of key escrow and third party key holding.


Dell supports efforts to establish a self-regulating, non-statutory accreditation scheme for Trust Service Providers.
Dell welcomes the removal of the proposal for a rebuttable presumption of validity for electronic signatures.
Dell proposes that electronic signatures should be recognised as completely satisfying the requirements of UK statutory law, which have been traditionally fulfilled through the mediums of paper and writing.
That is not dissimilar to the points I just made.
I referred earlier to Microsoft and the letter I received from David Svendsen, the chairman of Microsoft in the UK, in which he set out a number of bullet points. He
strongly supports the Bill's prohibition on the imposition of key escrow by Government Ministers … strongly supports the Bill's granting of legal recognition and admissibility to all electronic signatures … believes that the Bill's approach to allowing electronic fulfilment of written and paper requirements in UK law needs to be strengthened".
Again, that touches on a point that I made. Mr. Svendsen
supports the Government taking powers to establish a voluntary approvals scheme for cryptography service providers.
Finally, he congratulated the Government on
introducing legislation that will serve as a model for Europe".
That was from the largest IT company in the world—indeed, probably the largest company in the world.

Mr. Allan: At the moment.

Mr. Miller: Perhaps the hon. Gentleman is thinking of my next sheaf of papers, which is from amazon.com.uk. He may have an insight that I do not have. However, similar notes of accord have been coming in the post over the past few days.
The hon. Member for Rutland and Melton would have been right had we been debating the Bill as originally proposed, as some of his points were those raised by industry at that time. It is a pity that the hon. Gentleman did not catch up by recognising that the Government have moved positively in partnership with business, commerce and industry—not just in the UK, but worldwide.
I welcome the Bill, and I hope that my minor observations can be debated in Committee. I hope that we get the Bill rapidly on to the statute book to ensure that Britain remains a lead player in this important area of business and commerce.

Mr. Ian Taylor: At last—this is the most elephantine pregnancy ever. In the dim and distant past, I was the Minister who started on this process in 1995. Now we have the Bill, and the Home Office has been seen off, thankfully. I congratulate the Minister on achieving something that I did not achieve. To put that into context, I had an achievement in terms of the Internet Watch Foundation. That was a self-regulatory body, created when the Home Office was ready to pounce in the absurd legislative way that only it knows.
I would like the Minister for Small Business and E-Commerce to pass on my congratulations to her officials, many of whom were full of enthusiasm in 1995. I hope that they still are, although I am less than sure. Nevertheless, they have done a remarkable job in seeing the Bill through its various periods of gestation.
I declare the interests which are in the register. From time to time, I am asked to advise companies, and I am a director of one or two technology companies. If it is thought that the benefits to the UK that the Bill will bring will also benefit them, I will be delighted to have declared my interest in that context.
It is difficult to remember the atmosphere when we proposed the ideas of key escrow and trusted third parties. I came across a delicious quotation from Janet Street-Porter, now the editor of The Independent on Sunday—bless her heart. Back in those days of 1996, she said:
Forget the superhighway, get a life. The future isn't wired. In fact historians will look back on the 1990s and the current surge of techno-hype and net-euphoria as a bizarre blip, a meaningless cul-de-sac in the cultural story of the 20th century.
That will not make me rush out to buy The Independent on Sunday. Nevertheless, somebody has to be that wrong.

Mr. Miller: Does the hon. Gentleman agree that the problem that he had in the previous Administration was that that was precisely the view of that Administration?

Mr. Taylor: The House, as always, was full of wisdom on those occasions—it just did not happen to understand what I was saying. That was the problem.
It might have been a good job that the House did not understand. Since then, the National Security Agency in the United States has genuinely become a hate figure. In 1998, the plot of a film called "Enemy of the State" revolved entirely around the NSA murdering a politician who was trying to bring in a Bill with powerful encryption. I hope that no one gets that sort of encouragement, because we cannot afford to lose any politicians from the Conservative Benches—we have few enough as it is.
In principle, I welcome the Bill. It is difficult for a Government, and the Minister should be humble in one respect. The rate of progress since 1997 has not been as fast as many of us would have liked. In addition, it is dangerous for a Prime Minister to put so much emphasis on the importance of an e-envoy, only to find that the e-envoy does not take up his post for about 18 months. In fact, the e-envoy will not start until 1 January.
There is a problem in translating the fine words used by the Prime Minister and across Government into effective implementation—that is what the industry is looking for. In that context, I hope that the Minister will indicate when the 60 recommendations of the "e-commerce@its.best.uk" report, from the pen of Jim Norton and his committee, are to be put in place. What is the action plan for that? In many cases, they are ahead of what we think the Government's plans are. That is important, particularly in terms of education. The Department for Education and Employment still talks as if it has not read the report.
I hope that the Minister will use her undoubted charm, but also steel, to make sure that other Departments understand what is going on. I shall give her a tip in a spirit of co-operation—she should use powers which are trans-departmental to make an impact on the Government's understanding of e-commerce. I had those powers in the scientific sense, as Science Minister, and I arrogated to myself the powers in the technology sense. She must do the same if she is to be effective, and if any of the report's action plans are to be put in place. Somebody has to browbeat other Government Departments and Secretaries of State to apply them.
There is still a degree of confusion, which is not clarified by the Bill, about whether internet service providers are common carriers or are to be more responsible for the content that they carry. It is a complex matter, and I know only too well that there has been much thought about it. However, I would be grateful if the Minister would remove the uncertainty. She should continue, with Oftel, to look at the problem of unmetered calls. I will try to clarify this point. If I do so wrongly, I am sure that the Minister will assist the House by pointing out why.
The difficulty with unmetered calls is not the willingness of companies—although one should watch BT carefully, because if it were to introduce very low-price or even free calls that were in a sense subsidised by its other activities, it would be eliminating competition rather than spurring it on—but the need to protect poorer people, who would by definition probably face higher than normal subscriptions.
The hon. Member for Workington (Mr. Campbell-Savours) over-emphatically attacked BT, which was unfair, but he missed the point that unmetered calls are often attached to a service with a monthly or quarterly subscription. The consistent policy of this Government and the previous Government has been to try to ensure that the subscriptions are kept low, because of the problems of poor people. The clash between the subscription levels and the unmetered calls is one of the obstacles that Oftel is still wrestling with. It is a pretty intractable issue.

Ms Hewitt: The hon. Gentleman raises an important point. It is precisely for that reason that we do not want a single pricing model—nobody with any sense wants that—that would require low-income low users to pay very high subscription charges. It is perfectly possible to have a range of tariff models, as we already have for mobile telephony, to enable low-price or unmetered internet access calls, especially at peak times.

Mr. Taylor: I endorse that point. The competitive market—the result of the Conservative Government's policies—enabled that to happen.
I want to be naughty to the extent of saying that I believe that the Secretary of State's recent referral of the Cable and Wireless-NTL deal was a mistake. It broke the pattern of encouraging substantial competitors to grow in the marketplace. Growth in the cable industry has been based on an aggregation of franchises. The reference gave the wrong signal to the market. We want more competition, not less.

Mr. Wyatt: On access to the internet for poorer communities and families, does the hon. Gentleman agree that a good precedent was set when we took £3 million from television licence receipts to subsidise the creation of the Open university?

Mr. Taylor: There is a huge opportunity to be innovative. The hon. Gentleman is one of the more innovative Government Members. Perhaps one day Oftel will take the Independent Television Commission within its bosom and we will get a more rational debate.
Others have emphasised the importance of the on-line world. The figures are hard to verify and can be approximate, but we know that there are about 11 million internet users in the United Kingdom, with 11,000 joining each day. Many more people have access to the net, at work, home or school—about 18.6 million is 40 per cent. of the population. The critical mass is already with us. The rate of growth is astronomical.
Andersen Consulting's figures show that the value of the European internet market could be $430 billion by 2003, with 170 million users, as against $19 billion this year. That represents a growth in the European market from less than 20 per cent. of the size of the United States market this year to 60 per cent. by 2003, which shows how dynamic the European single market is.
There is further expansion because the internet is not a personal computer monopoly. Digital television is moving ahead dramatically, and most exciting of all are the wireless applications and the delivery of messages to mobiles. They are slightly taut messages in stretched second-generation digital but on third-generation mobile we will get the full multimedia impact.
Someone asked what we were doing in the dark, distant days before history began—meaning the previous Government. We were preparing the auctions that the Minister is about to launch. The auction arrangements were already thought through by the Conservative Government, but the trouble with the processes of government is that they move so jolly slowly. They had to move more slowly than we would have liked because of the need to get international agreements on what are known as the UMTS arrangements, so that the system, when it came, could be truly global.

Mr. White: The hon. Gentleman made such proposals in government but Opposition Front Benchers are now vehemently against them, which shows how far out of touch they are.

Mr. Taylor: The Opposition's job is always to oppose, whatever the justification. I am not on the Opposition Front Bench, for reasons that we will not go into.
It is important to understand what the Minister thinks she is signing up to in the e-commerce directive—which is based on host-country legislation, as she rightly said—because I understand from a senior member of Directorate-General XV that there are some specific caveats, for example concerning moves by any country to protect its consumers that are justified by public policy or public security. They are pretty big caveats. I hope that we will get some clarification before we sign up because one can drive a coach and horses through home-country control with such caveats in place.
I pressed on the Minister the need to have a trans-departmental authority. She should ensure that home-country control under European directives also applies to the Financial Services and Markets Bill, clause 19 of which creates concerns about the powers taken to regulate internet sites outside the United Kingdom. The conflict needs to be reconciled. There is no doubt that the financial services market is becoming global. I am glad to say that both the Corporation of London and the Worshipful Company of Information Technologists welcome the Bill and are determined to ensure that London plays its full part. We must be careful to base both British and European legislation on sound principles that encourage e-commerce rather than restraining it.
The alarming skills shortage both in the United Kingdom and in the European Union as a whole could hold back many of our good efforts to stimulate the growth of e-commerce.
The Government should show leadership. It is no good for the Prime Minister to say—correctly—that companies that are not entirely on-line in five years' time may well be out of business, when the Government's own target for providing their services on-line is only 50 per cent. by 2005. Is the logical extension that the Government themselves will be out of business by 2005? I doubt that they are saying that, but that is the logic of the situation. There is no excuse for not pushing ahead more quickly.

Mr. Miller: The hon. Gentleman must distinguish between businesses that need to be at the leading edge and Governments who have to provide services to consumers who currently have limited access. There is a chicken-and-egg argument there, and clearly the Government needs to take action to encourage the growth of access, but it would be improper for them to seek to deliver all their services on-line if all our citizens are not fully wired.

Mr. Taylor: That is an admirable but not very powerful contribution. The reality is that the Government have to act as a catalyst. The dates set are too lax and the targets set are not realistic. It is as if a large company were to announce that within a year no member of its supply chain would be accepted unless it were capable of dealing on-line in all aspects of its business. Those companies affected get on-line if they want to stay part of the supply chain. Perhaps the hon. Member for Ellesmere Port and Neston (Mr. Miller) should talk to the Minister about innovative ways in which public-private partnerships can finance moving to on-line status.
The Secretary of State for Trade and Industry and the Minister have reassured me about the risk that the regulation of investigatory powers legislation that is proposed would undermine what the Department of Trade and Industry is trying to do with this Bill. I take the Minister's word that it will not, and I am more relaxed on the subject.
I also welcome the sunset clause in part I, although I agree with my hon. Friend the Member for Rutland and Melton (Mr. Duncan) that part I is an intrusive element in the Bill. Given that it is included, I hope that the Minister will be able to reassure the House that there will be a proper discussion if the powers that she has retained are ever to be triggered. If so, we can accept the clause in the interests of speed, although my hon. Friend will make a shrewd, tactical judgment on how to progress it through Committee. I do not intend to serve alongside him, because he will do it so well without me.
In part III, I welcome the explicit restriction on key escrow, which is well put. It is hidden away in part III, but at least it is there and it is a key development. Natural concerns arise about whether the Alliance for Electronic Business scheme will be acceptable, but it is the only one being discussed. The more that the Minister can do to review her latest proposals and then give comfort, the better. Certainly, I know that industry is waiting for formal announcements in support.
The Minister should not ignore my intervention in her speech. I say that because I am not sure that she fully took the point. If the Government introduce their scheme with

the private sector, whether business or consumers, as a key escrow system, it may become the de facto standard for others to follow. It is best to be sure that the Government understand what influence they would have on the shape of the market if it were to adopt the wrong approach.
The biggest criticism of the Bill is that it focuses on cryptography. The process of encryption is important, including signatures—I do not underestimate their importance in getting the process going—but there are many other confidence-building measures that can be taken. Some of those 60 points in the earlier report I mentioned should have been slotted in during the consultation period—perhaps when no one was watching—and there would then have been huge excitement when the Bill was introduced, because it would have seemed to encourage electronic business more generally.
If the Government can be consistent about electronic signatures, I hope that we will see dramatic, exciting progress. I am sure that my hon. Friend the Member for Rutland and Melton will criticise the lack of other legal changes. I mentioned the Inland Revenue and Customs and Excise, because I know that they are working on the issue—that is what worries me. I am interested in the basis on which those organisations are working, because I do not want the Minister to be thrilled to have got the Bill through only to find that the Treasury announces that her system is incompatible with its system. That would not be the first time that had happened.
No time scale is given for the co-ordination of technical solutions for some of the other Government changes. There is also a lack of visibility for Government changes. I hope that the Minister will talk to other Ministers in her Department about the impact of the Bill on international trade agreements, for example, and whether they will be brought on-line in conformity with the Bill.
We also need urgent guidance, although I am not qualified to make comments on it, on how the courts will interpret some of the provisions in the Bill. What will constitute an acceptable signature for the courts? That will have be tested, but the issues include whether a certificate or identity is binding, the reliability of signature processes and technology, and the intent or possession—instead of relying on technical solutions alone. Those are complex issues and I hope that the Minister will at some stage assure the House that she has a grip on them. When the electronic signatures come to be tested in the courts, we do not want to find that the Minister's work is undermined.
Confidence is not just about encryption, but it helps enormously with verification of the identity of the people with whom one is dealing. Encryption can enable transactions to take place on the net in circumstances in which people do not know each other's identity and need some reassurance and verification. Certificates will be increasingly issued to identify people, but confidence and security can be given in other ways. Firewalls have been the normal way to protect information, but secure networks will be the way forward. The Government need to consider other methods of reinforcement that they can use when dealing with the consumer—we used to call it Government direct, but I cannot remember what phrase this Government uses for it. Will the Government use smart cards? I warn the Minister, if she is as keen on smart cards as I was, she will have the same battles with


the Home Office that I had. In my day, the Home Office seemed to think that smart cards are identity cards and a terrible threat to civil liberties, which is of course nonsense.
I welcome the Bill. It will provide a Government framework for a self-regulatory prospect, but I warn the Minister to be careful in building confidence. We should not rely on the back-up powers. The Bill will underpin the admissibility of electronic information and I hope that the Minister will clarify the commercial law in other areas across Government. I hope that she will also ensure that the Government adopt the Bill as soon as possible after it hits the statute book. In conjunction with my hon. Friend the Member for Rutland and Melton, I hope that it hits the statute book in fine form, without any of its frills, as soon as possible.

Mr. Brian White: I had intended to start my contribution with an attack on Tory Front Benchers but, before I do so, I wish to exempt the hon. Member for Esher and Walton (Mr. Taylor). I agreed almost entirely with his comments, most of which were sensible and constructive.

Dr. Ladyman: That is why he is not on the Tory Front Bench.

Mr. White: There may be one or two reasons for that. It is interesting to contrast the consultation on this Bill with the record of the previous Government, because one or two points stand out. I remember working in the IT industry when the previous Government did not have an IT strategy. Their approach was very laissez-faire. I welcome this Government's IT strategy, which will build on what small businesses and the IT industry are doing and are good at.
The issue of key escrow has already been raised, so I shall not go into it. The hon. Member for Rutland and Melton (Mr. Duncan) mentioned IT failures, but I suggest that he considers the record of the previous Government and their decisions. The civil service used to be one of the best training grounds in the country for programmers and analysts. The previous Government's decision to bring in outside contractors and sell off parts of the civil service caused a lot of people to leave. We lost a whole generation of analysts and programmers in the mid-1980s; they went abroad because of the detrimental actions of the then Government. The Conservative party would do well to remember that many of the people who went abroad helped with the development of the internet in silicon valley.
The previous Government also created local monopolies with cable companies, which are causing some of the infrastructure problems. British Telecom used to be the cable company in Milton Keynes, which is a growing new city. BT laid the cable into the new parts of the city, but would not touch the older areas. Many households did not get cable because they were in the poorer, older areas. Because of its local monopoly, BT had no competition. The creation of local monopolies goes completely against the ethos of competition.
When BT was privatised, the Tory emphasis on ownership, rather than liberalisation, of the market—which is still apparent in some of the comments of

Conservative Members tonight—distorted the argument. It should be about how to create a marketplace and the conditions for competition, not about who owns a business. However, the Tories have adopted that approach time and again, and they are making the same mistake tonight with this Bill.

Mr. Allan: Does the hon. Gentleman think that it would be helpful, in creating a better marketplace, for there to be competition over the single piece of copper that still goes into most households, by splitting off the local loop? Does he see that as the best way of generating unmetered calls and all the packages that we want?

Mr. White: It is not the only way, but I would not object to it.
I find it distressing that e-commerce is referred to as something new, which suddenly appeared out of a vacuum, with no history. Electronic commerce is not just the internet. Britain leads the world in electronic data interchange. We were responsible for a range of electronic innovations that are used when people make credit or debit card transactions over the phone. We must remember that, and learn from it. I ask the Minister to consider how the credit card industry started, and the ways in which credit cards have come to dominate the market. Although the industry's speed of change over the past 20 or 30 years is different from that of the net, there are similarities in market regulation and the way in which electronic communication has facilitated the interaction between shopkeepers and banks. The two industries are not exactly the same, but there are a number of similarities to build on.
The hon. Member for Esher and Walton raised an important point. The internet is not one thing, nor will it become one thing—it will be a range of technologies, linked to the web. Intranets and secure market places, to which the hon. Gentleman referred, will become increasingly important. They have different regulatory requirements from consumers interacting with an open system. There are very important considerations when it comes to secondary legislation.
The growth of call centres raises a number of issues. The Competition Commission is carrying out an investigation into the ice cream industry. Walls Direct is in my constituency, and I shall not use this debate to argue the rights and wrongs of such an investigation, but it has a direct effect on how e-commerce can develop or be retarded. It is important that regulatory bodies such as the Office of Fair Trading and the Competition Commission—I am not including Oftel—recognise the impact that their decisions have on electronic commerce and on what we are doing in making Britain a leader in electronic commerce.
With electronic commerce, we are talking about a global economy, not simply about Britain and the European Union. Decisions made by regulatory bodies in France and other countries, particularly the United States, have an impact on us. It is critical that we get the international agreements right.
The Competition Commission needs to consider new entrants as well as existing players. One problem with electronic commerce is that many of the key players are new entrants to the market—they did not exist when consultation took place in March, and that illustrates the speed of change.
My local newspaper runs a forum on its web page, to which anyone can contribute on the subject of their choice. I go through it regularly to respond to constituents on local issues. Somebody contributed an e-mail item about a court case and a paedophile. The item was withdrawn from the forum because it was considered libellous. A newspaper could have gone to its solicitors and published the article or not, depending on the solicitor's advice, but, because the item was transmitted instantaneously, with some people seeing it and responding, there was an argument about the legal definitions of when an internet service provider can withdraw such items. That example, although not about commerce, illustrates the change that has occurred, in that electronic commerce is instantaneous, and there is not necessarily time to obtain the legal advice, as there would traditionally have been.
This is a useful Bill, and I welcome it. Unlike the hon. Member for Esher and Walton, I think that part I is important, for one simple reason. Although I hope that it is not used, and agree that it should not be, its inclusion gives the industry the impetus to create a voluntary system. The hon. Gentleman talked about the internet watch foundation—an excellent example of what should have happened and will, I am sure, happen. I hope that, when five years are up, the sunset clause will be implemented.
One of my concerns about part I, however, relates to fees, whether charged on a voluntary or statutory basis. We must learn from our experience with the Food Standards Agency fees. One standard fee leads to problems for small businesses, while a sliding scale leads to questions of fairness. Why should larger companies pay massive sums to subsidise smaller ones? I do not have an answer, but we must get the issue right.
It is important to have a problem-solving mechanism in the voluntary system, as it evolves, so that the Government and the industry can resolve any concerns. One of the worst things that the Government could say is, "We have a problem. That is the end of the scheme, and we will implement part I." The Government should include problem resolution in their dialogue with the industry, and I am sure that they will.
Part I will have an impact on other consumer legislation. We must ensure that that legislation outlined in "Modern markets: confident consumers"—the Government's consumer White Paper—is compatible with part I and does not unintentionally implement it through the back door ahead of time or undermine what we are trying to do in agreements with the industry. Part I will give the industry a spur towards achieving a voluntary system, and allow it to do so in a flexible manner. What is right now may not be right in three or five years. The scheme must be allowed to evolve to accommodate changing technology.
It was interesting to compare part II with the Irish and Canadian examples. I think that the Government have got it about right. About five years ago, I wanted to introduce a scheme to replace all the mortgage deeds held by the company for which I worked, as they took up miles of corridor space. However, the lawyers told me that that was impossible, as each deed had to be written on a piece of paper bearing a seal. It is of critical importance to recognise that the problem goes beyond electronic signatures and includes the sealing of deeds. We must

ensure that the electronic equivalents of deeds and seals are included in the provisions. I am therefore especially pleased with part II.
However, the Bill will permit individual Government Departments to operate at different speeds. I am worried that not every Minister will share my hon. Friend's enthusiasm for the Bill, and that some—especially if, God forbid, we get another Conservative Government—may not want to adopt its provisions. Therefore, I urge my hon. Friend to set a timetable and to encourage other Ministers to adhere to it.
When they were set, I considered that the targets for attaining electronic government were right. However, although it has been argued that key escrow was a valid consideration in 1996, we have now moved beyond that point. The time has come to review those targets and to consider whether they are still appropriate, given the changes in technology since they were adopted.
I congratulate the Government on the inclusion in the latest ministerial handbook of every Minister's e-mail address. I am delighted at that, as I hate writing letters and e-mails are much easier.
I am pleased that the old part III has been removed, and I welcome clause 13, which is excellent. I was worried that it applied only to part I, but I was reassured on that point—and delighted as a result—by what my hon. Friend the Minister said earlier.
When I intervened on my hon. Friend the Minister, I mentioned Oftel. The old saying is that anyone not part of the solution is part of the problem, and I continue to regard Oftel as part of the problem. Oftel will investigate complaints about any telecommunications company, but the process could take two to four internet years—about six to 12 months. Even when a solution is reached, it will not necessarily be implemented. The process takes far too long.
Oftel is also guilty of considering only the current state of the competitive market. It does not take into account the future and what we are trying to achieve. Do Oftel's decisions encourage or discourage e-commerce? I believe that it has a duty to encourage it.
Oftel says that it does not need more powers to encourage e-commerce. I disagree: however, if it really does not need new powers, it should make more use of the ones that it already has.
I understand that France Telecom in Paris has introduced an asynchronous digital subscriber loop system for £25 a month. That system is available now. BT has suggested that its system, which will be available at some unspecified future date, will cost about £60 a month. I am worried that we are slipping behind in that respect. The magazine Communications Week International stated:
At first sight, the UK will have the most expensive DSL system in the world.
Last week's decision by BT gets one cheer from me. Oftel must take seriously the question of the local loop, and offer proposals. BT staff say that they are happy to accommodate Oftel's decisions and to deliver on them, but Oftel must take the lead and take a long-term view about where the competitive market is headed. There is a temptation for BT to decide to delay the introduction of ADSL because the lease line system is very profitable. I hope that the company does not give in to that temptation, and that it introduces ADSL as soon as possible.
The new part III requires a confident regulator with modern powers. Although the changes to part III are welcome and right, we need Oftel to go further.
The warning has been given before that e-commerce might create information haves and have-nots. Much talk has been devoted to ways in which that problem might be avoided or rectified, but the key lies in the interaction between Government and industry on the one hand, and voluntary groups and local communities—both geographical and in terms of shared interests—on the other.
Many information technology pilot schemes are under way around the country, and the one in Lewisham is the most famous example. However, they do not cover the whole country. One of the biggest challenges facing the Government is to translate successful pilot schemes into schemes that offer something to everyone.

Mr. Allan: Does the hon. Gentleman agree that it is critically important to get electronic banking right? Given that the world of e-commerce is based on credit and credit cards, many of the people about whom the hon. Gentleman is talking will be excluded.

Mr. White: The hon. Gentleman anticipates my next point. The growth of institutions such as E.Bank, First Bank, Egg and others is an important step forward, which I welcome. That development will transform the way in which the internet is used, just as direct marketing via telephone lines did three or four years ago. An important development is taking place, and the Government should facilitate investment in the new companies coming on line.
I mentioned the Competition Commission earlier, and a regulatory framework needs to be put in place for e-commerce. The financial markets and the Treasury must recognise that they need to facilitate e-commerce. The Bill is therefore extremely important, but it could fail if other bodies put obstacles in its way. The Government must have a joined-up approach. I welcome the fact that we have an e-Minister, and an e-envoy who knows his way around the civil service, but we must not allow the problems that I have outlined to take root. It is encouraging that the Government recognise the danger, but they must also deliver when it comes to avoiding it.
I am also made uneasy by the innovations that are taking place. We talk about electronic communications, but there is no guarantee that innovations will be confined to that field. For example, although I am not sure that the solid state transference systems already operating in laboratories are covered by the Bill, the Government need to be aware of the issues that such innovation raises.
If I can agree with the hon. Member for Rutland and Melton about anything, it is with his comments about language. I wholeheartedly endorse what he said about the need for our legislation to be written in plain and non-sexist language. This Bill is one of the better examples of the use of non-sexist language, but it still refers unnecessarily often to "him", "he", "it", and so on. Such references are not needed, and I plead with the parliamentary draftsmen to recognise that we are not living in the 18th century.

Mr. Baldry: Does the hon. Gentleman realise that, under the provisions of the Interpretation Act 1978,

which date back almost 100 years, any Act of Parliament allows us to construes the word "she" whenever "he" is used? It is a totally neutral word.

Mr. White: I accept that there is such an Act, but not that that position is valid. If business, local authorities and most people outside can use non-sexist language as a norm, there is no reason why this place cannot.
I support this much-needed Bill. The changes that it makes will benefit this country, but other changes in respect of infrastructure and of obstacles in government and business must also be tackled.
I congratulate the Government on listening to industry. Industry said that it did not believe that the original provisions were right and asked for change. The Government listened and changed the Bill. That is a foundation for success.
I also congratulate the Government on securing a double whammy by helping British business while exposing the divisions among the Tories and their hatred of the European Union. One has only to mention Europe and they find a reason to vote against things. Opposing the Bill, as the Tories want us to tonight, would damage the United Kingdom's lead on e-commerce. I congratulate the Government on resisting that, and on the Bill.

Mr. Brian Cotter: Unfortunately, owing to a prior engagement, for which I could find no substitute, I shall have to leave before the end of the debate. I have notified Madam Speaker and the Minister.
I have a small business, although it is not particularly an electronic communication business. My interest is that, like many businesses, we hope increasingly to use such means.
I know that the Government attach particular importance to the Bill because Her Majesty has announced it twice. I congratulate the Department of Trade and Industry to the extent that, over time, it listened to very real criticisms. The Bill has shrunk and shrunk, for which many of us are grateful. We are particularly glad that the Department has excised part III of the draft Bill, which had no place in trade and industry legislation. It would have been better suited to the Home Office.
The final Bill is slim, but I regret that I must still question the relevance of some of its remaining limbs. Its ultimate aim is to facilitate the growth of e-commerce. The DTI's press release states that the Bill is designed
to develop the UK as the best environment world-wide in which to trade electronically.
Liberal Democrats support that because electronic efficiency will increase overall wealth by raising economic efficiency.
I am sure that the Minister agrees that it is important that traders recognise that the internet offers a new system of trading. Conventional trading techniques cannot simply be translated into cyberspace. I said that I have my own business. Many colleagues would expect me to say that I have an established web presence and that everything is up and running, but that is not the case. Instead, having, I hope, amended our computer systems to ensure that they will not be hit by the millennium bug, we are carefully re-examining our sales strategy and products in conjunction with a marketing company. We will soon be looking to market our


products through e-commerce. It is important that business does not think that e-commerce is the answer, that one can simply slap something on a page and that is the end of it. The matter must be considered. I hope that the forthcoming Small Business Service will help to facilitate matters, especially for the small business community.
I well remember that when I was first elected to the House I was one of those who spoke about the millennium bug. I will not embarrass anyone, but a question on the subject was referred to the Minister responsible for the millennium dome. While there may be problems with the dome, that was not the force of the question. I take my hat off to the many hon. Members who know a lot about the subject, but many colleagues clearly knew nothing about it two and a half years ago. That extended to Ministers. It is important to educate people about electronic commerce.
The hon. Member for Esher and Walton (Mr. Taylor) is leaving. He rightly expressed concern about the cost of transmission. The Minister referred to the number of different options with, for example, mobile phones and suggested that that could be a way forward. I accept that, but the choice of systems is wide and it is not always easy to choose the most relevant, cheap and applicable one.
This morning I visited Meadvale primary school in my constituency, where I learned something that is relevant to the debate. I saw for the first time a system whereby the lesson—in this case a geography lesson—was projected straight from a computer on to the wall. The system is quite expensive, but the school was able to employ it through special funding. Children could see the whole globe on the screen. It could be adjusted to show the country concerned. My point is that this is another means by which we should be able to communicate sales or other messages within companies or to other companies.
I will concentrate on the Bill's two substantive sections: the setting up of the approved cryptography provider register and the legal status of electronic signatures. I am not sure that the section on approved cryptography providers could not have been dropped altogether. That is the opinion of the Law Society. The case for such a register has not been convincingly made. The market is developing fast. Lack of confidence in cryptographic efficiency is not a significant barrier to trade.

Mr. Allan: Does my hon. Friend share my experience of common information technology standards? Their great joy is that there are so many from which to choose. Is he worried that the cryptography service may fall into the same trap as other Government-promoted standards such as those for networks, whereby the Government produce a scheme that industry rejects because it has moved on years by the time that it is implemented?

Mr. Cotter: Exactly. I hope that the Minister understands that point of concern and will address it.
I welcome the clause that explicitly forbids the introduction of requirements for key escrow. I shall not say much about that because many hon. Members have covered it. The fact that the Government feel obliged to put a curb on their secondary powers is of concern.

Mr. Duncan: I am most encouraged by the fact that the hon. Gentleman agrees with so much of what I said. Do Liberal Democrats intend to vote with the Opposition on our reasoned amendment?

Mr. Cotter: We are concerned about many points, and we shall listen closely to the Minister's response.

Although the Bill has some faults, we shall be able to discuss it in Committee. As the hon. Member for Esher and Walton pointed out, the Bill has its faults, but it also has some merit. We shall consider carefully what the Government say. The welter of reserve powers is of great concern, and occurs increasingly in Bills introduced by the Labour Government.
Another problem relates to a basic concept of the legal process. At present, a signature is valid only if one intends to make it so. In any dispute, the burden of proof is on the person who intends to rely on the signature, not on the person who is alleged to have made it. I am concerned that that distinction is in danger of being overturned by the measure. The evidential weight of a signature certified by an approved provider will be in favour of its recipient.
If consumers receive goods or services that they claim not to have ordered, a supplier may be able to hold them liable simply on the grounds of receipt of their electronic signature, and the burden of proof will be on consumers to prove that they did not make it.

Mr. Allan: Is my hon. Friend aware of the phenomenon of "granny chose a weak password and lost her house"? It applies where a grandson uses a computer to send something with a signature that was apparently valid, and—exactly for the reasons to which my hon. Friend referred—the consumer is held liable. If people cannot have confidence in their passwords, and the security of their home tenure, it will undermine the whole of e-commerce.

Mr. Cotter: I thank my hon. Friend for that intervention. In the light of earlier comments about including both genders, it would cover not only grannies but grandfathers. The Bill needs some tightening in respect of signatures.
Problems arise in relation to secondary powers and provisions that confer legislative powers on other Departments. The Minister for Small Business and E-Commerce referred to sunset regulation. She also answered a question about whether the Home Office would be able to overrule the Bill, and made several other points. I look forward to hearing those points strengthened later in the debate.
My hon. Friend the Member for Somerton and Frome (Mr. Heath) referred to the fact that the Lord Chancellor's Department had stopped the transmission of an e-mail, and asked the Minister for an explanation. I understand that it contained a somewhat rude reference to a judge. I am not sure whether that was grounds for not permitting the transmission.
The Government's aims are admirable, and we welcome the slimmed-down Bill. It is important that we should have a Bill, but we urge the Government to consider the concerns expressed by Liberal Democrats and others, so that we can produce a Bill that we can all support.

Barbara Follett: I welcome the opportunity to speak in this important and timely debate, because, in the last few days of the second millennium, it is fitting that we should prepare for the demands of the third. Those demands are already with us. It is not only the century and the millennium that are coming to an end;


as we speak, our old ways of communicating, trading and gathering information are on the way out. We are in the middle of a change so swift and so silent that many of us are scarcely aware of it. None the less it is there, and it is profound.
During our debate, people throughout Britain have been buying clothes in America, books in London, shares in Australia, gifts in Scotland, cars in Bristol and groceries down the road—all without leaving their homes. Sitting at screens in their bedrooms and living rooms, people are looking for jobs, debiting and crediting their bank accounts, downloading information and entertainment and chatting with friends on the other side of the world. If they want, they can go on all night or all weekend, or throughout all public holidays. That is a radical change in our use of time. It is a 24-hour world, with 24-hour trading, communication and information available, globally, at the click of a mouse.
I welcome that. As a mother with children scattered all over the world, whose working hours are unsociable, to say the least, that change is a real boon—especially at this time of year, when, with alarming regularity, I remember that there are only 25 shopping days until Christmas, that I have bought only two presents and that I do not know to whom to give them. Christmas is hard on the feet and on the wallet; on-line shopping does nothing for the second, but does wonders for the first.
It is estimated that the British people—including my hon. Friend the Minister for Competitiveness—will spend £14.2 billion on Christmas this year. As 13 million of us now have access to the internet, it is fair to assume that a sizeable amount of that money will be spent on-line. With 10,900 users coming on-line every day in Britain, that amount can only rise. In a year, the 179 million people who use the internet worldwide will rise to 250 million. Much of that growth will be in Europe, where it is predicted that one in three households will be on-line by 2004. Let us hope that much of that growth will take place in Britain. At present, we are second to Germany in the league table. By 2003, I want Britain to have the largest number of internet users in Europe.
Predictions for the growth of internet usage suggest slow but steady growth. Predictions for the growth of e-commerce suggest a sudden dramatic rise. In February this year, the market for e-commerce was estimated to be worth £12 billion; by 2004, it is predicted that it will reach £1 trillion. With figures like those, British businesses have no alternative but to go on-line. Many of them are on-line—especially retailers. That move may revive the fortunes of our high streets, where the reduction in the pressure for space resulting from the bigger supermarkets moving out may allow smaller niche stores to take advantage of the trend towards leisure shopping for unusual, individual items. I welcome that.
Most of the supermarkets are already on-line. Even the venerable Marks and Spencer went on-line at the weekend, although, admittedly, only to 1,000 select customers in Beaconsfield. I am not sure why Beaconsfield was chosen for the pilot scheme. Perhaps it has something to do with the hon. Member for Beaconsfield (Mr. Grieve), or perhaps it has something to do with the fact that my right hon. Friend the Prime Minister piloted his political career in that constituency, so perhaps it is a good area for pilots.
Banking on-line is well under way. Young people, in particular, prefer on-line accounts. As someone who, 30 years ago, worked in the hallowed marble halls of banks, I know how intimidating they are. On-line accounts are much more accessible, flexible and user-friendly; they are also far cheaper. However, the culture of call centres obviously needs a shake-up.
On-line share dealing is relatively new, but it is already enormously popular and it helps small investors to take on the mammoth firms. The launch of cut-price brokers has slashed the cost of buying and selling shares. Not surprisingly, the number of web-based share deals has more than tripled during the past few months. Small investors are making about 50,000 internet share deals a month, compared with fewer than 10,000 in January 1999. In the United States, where web-based share dealing began as recently as two years ago, a quarter of all trading is now done on-line, and 5 million people buy and sell electronically every day. Thanks to on-line information, small investors are coming into their own.
One of the newest developments on-line is the giving of donations, especially to the third world. I welcome the part that the Grameen bank—one of the leading groups in micro-financing in the third world—has played in bringing the internet to places such as India and Bangladesh. A subsidiary of the Grameen bank is now the largest internet provider in Bangladesh.
There is also much talk of third-world countries using the internet to make direct contact with firms in the first and second worlds, to deal directly with them, cut out the middle people and get a fair deal for their goods. That, like the other lightning-quick changes associated with the internet, poses problems for individuals, trading blocs and, in particular, Governments—problems that require careful and considered responses if they are not to kill the very thing that they are trying to foster.
Therefore, I am glad that the Bill, although a long time in coming, has been out to consultation twice before coming to the House. I am also glad that the Government took seriously the comments of those consulted, and amended the Bill in parts. We should be proud of the result. It addresses the concerns of consumers and producers alike, without overburdening them with regulation—a difficult balance to achieve—and despite the language, on which I am in complete agreement with the hon. Member for Rutland and Melton (Mr. Duncan), I thank those who drafted it.
On-line shoppers, bankers and share dealers throughout the world want security and confidentiality in their dealings on the net. Without that, we shall not get the trust necessary to develop the potential of the new technology. That is illustrated by a headline in this weekend's edition of the Sunday Express—
We're afraid the 'E' stands for easily cheated
says Simon Hinde, commenting on the software malfunction that caused a security breach in a major bank last week and allowed people to view other people's shares, causing a great deal of anxiety.
The Bill addresses some of that anxiety, especially with the introduction of electronic signatures, which are vital for the building of that trust. Part I, which provides for a list of the providers of electronic signatures, is also vital. We need the information, we need to know who the best providers are and we need the voluntary kitemark to which providers are being asked to subscribe.
I welcome all the provisions of the Bill, and I especially welcome the help that it will give my region. The eastern region, although one of the most developed areas, still lags behind London in its use of e-mail. Eighty-one per cent. of firms in London use e-mail, as opposed to 57 per cent. in the eastern region. That shows that we have a problem with take-up, because in the eastern region we have as many computers with modems as people have in London, but there is 23 per cent. under-usage of those PCs.

Mr. Cotter: Would the hon. Lady elaborate? Does she feel that that under-usage results from the fact that people are not well enough informed or from the costs of transmission?

Barbara Follett: I have spoken to businesses in my area about that. It is partly to do with the costs—although those businesses have invested in PCs—and partly to do with lack of training, but mainly to do with lack of confidence. People believe that if they put out on the net their signature, or something confidential, it can be read. In some cases, that fear is still well founded. People cannot be sure that their e-mails will be confidential.
The Bill goes a long way to restore that trust and confidence, so I welcome it. I know that, when it becomes law, people in the eastern region will feel better about giving credit card details. Worldwide transactions on the net are most often aborted when people are asked to key in their credit card number. Therefore, the net is being used much more as a marketing tool than as a purchasing tool. If we want to gain the maximum benefit from it, we must ensure that it is also used for buying and selling goods. That is such a challenge in the east of England that the development agency considers that its main task in the next few years is to encourage the spread of e-commerce.
As the Government will be doing 90 per cent. of their routine procurement on-line by 2000, businesses must take up the net. They must meet the challenge of that new technology. Furthermore, if we are going to face the future—the future in which we have set-top boxes and can access the net in ways other than by using PCs—we must ensure that people have confidence in that technology.
I look forward to the day when I can access NHS Direct as NHS on-line, interactively with my television or my PC, but I know that I shall want that information to be confidential. Who wants to share their bunions with the rest of the world, still less with the rest of the press? However, if I can be certain that my personal information will remain confidential, such access will be a marvellous tool. The Bill goes a long way to ensure that we meet, and are prepared for, the future.

Mr. Tony Baldry: I start with two declarations of interest and two apologies. My first declaration of interest is the one in the Register of Members' Interests. I am chairman of a United Kingdom subsidiary of a Saudi Arabian company which owns one of the seven internet licences in Saudi Arabia. Other companies with which I am involved also have internet interests.
My second declaration is that I shall speak on behalf of the Select Committee on Trade and Industry. The Committee has 11 members, 10 of whom are in Sweden

at present. I am sure that they are doing very valuable parliamentary business there. I am the only member who appears not to be in Sweden, so it has fallen to me to speak in the debate on behalf of the Committee. For reasons that I shall explain, the Committee has done a fair amount of work on the Bill. I hope to share some of our—unanimous—thoughts with the House; during this Parliament, all our reports have been unanimous.
My first apology is that, in the Bill and the debate, there are many words that one just has to assume that everyone understands. Perhaps Hansard should include a glossary of terms such as escrow, encryption and T schemes. One must assume that everyone who takes part in the debate understands those terms, because it would otherwise be difficult to communicate.
My second apology is as follows. I discovered a little while ago, when things such as A to Zs and telephone directories became a blur, that I needed glasses. I have not yet cracked how to read and look at the Chamber simultaneously, and I have a choice: either hon. Members will be a blur or what I want to read will be a blur. I hope that hon. Members will not mind if I decide that it is preferable that they should be a blur and that I can read what I want to say.
The Select Committee has been considering e-commerce for more than a year. As I believe that we have all heard, proposals for the Bill have now been in two Queen's speeches. So for the first few months of 1999, the Select Committee was in a curious position: we began to take oral and written evidence, but the Government were unable or unwilling to produce a Green Paper or a White Paper, let alone a Bill. We had to respond to proposals of uncertain weight.
In March, a consultation document proposed, among other things, a statutory voluntary licensing scheme for cryptography service providers, a legal regime for electronic signatures centred on the introduction of a rebuttable presumption, the promotion of key escrow and key recovery technologies without making key escrow a criterion for licensing, and power for the law enforcement authorities to require keys or decoded texts under the equivalent of a warrant. The Select Committee on Trade and Industry considered the consultation document's proposals swiftly and reported in May. We recommended that there was a need to justify the rebuttable presumption regime, that powers to introduce a statutory scheme should come about only if a self-regulatory scheme was seen to fail, and that key escrow should be dropped altogether in favour of the proposed new power.
In June, the Select Committee reported on a range of e-commerce issues not in the legislative programme. In July, the Cabinet Office performance and innovation unit reported on a similar range of topics and, at the end of July, the Government published a Command Paper containing the reply to our report and the draft Bill. I am glad to say that the draft Bill adopted the Committee's recommendation that a statutory scheme should be introduced only when a voluntary scheme was seen to have failed, followed the Committee's lead and abandoned rebuttable presumption in favour of prevailing legal doctrines, and dropped key escrow promotion.
Earlier, it was said that the Government had listened to industry and business. I hope that, in taking evidence, the Select Committee also provided a way by which those concerned could make their views known to the House.


By producing a report, I hope that we were able to consolidate and harmonise those views. It is to the Government's credit that they took on board the unanimous report of the Select Committee.
The Select Committee does not hang about—indeed, we worked over the summer and produced a report based on the previous evidence. The Minister was once a member of the Committee, but he found the pace so fast that he asked the Whips whether he could be transferred to a job in government; he found it too difficult to keep up with us. The Committee considered the Department of Trade and Industry's response to written questions and the responses received by the Department about the draft Bill. It agreed a report on this draft Bill in late October. The report was published on 3 November and made several detailed recommendations.
It would be fair to say that the Select Committee welcomed the Bill. We welcome clause 13, which is in part III. It is a crucial new provision that responds to the Select Committee's recommendation that the Bill should explicitly exclude the use of key escrow as a criterion for accreditation under a statutory regime. Of course, more information is required on some subjects. In particular, information is required on the timetable for the commencement of parts I and II, on a draft of the T scheme and on its start date, which will be independent of the Act, and on the level of fees. Doubtless, such issues will be dealt with in Committee.
Some measures have been added to the draft Bill that require explicit justification. They include the clause 8(3) change to relax the criteria for record keeping of electronic storage or communication, and the clause 9(6) rider, which expands the scope of orders made under clause 8. Part III, which was formerly part IV, on telecommunications licence modifications, is not only an ever more evident add-on, but raises fresh unease because it will give added powers to the director to decide what constitutes a significant minority for objections. There has been no sign of movement on the process for changes deemed regulatory, but it is balanced by an attempt to clarify grounds for appeal.
I suspect that the members of the Select Committee and of the Standing Committee will want to ask specific questions. It would unfair to detain the House on those points now, because they are matters for Committee. However, it will be good if the Government can keep the House and industry abreast of the implementation dates for various provisions in the Bill. They are not always self-evident from the Bill and people will want to know when the different provisions will apply.
Although it is a narrow Bill, its provisions are clearly worth implementing. I hope that the kitemark of approval and the Bill itself will start to encourage consumer confidence. The hon. Member for Stevenage (Barbara Follett) made a sensible and proportionate contribution and she made it clear—I think that everyone would agree with this—that although the internet and e-commerce are expanding exponentially, huge numbers of people are wary of using the internet simply because they are worried about fraud. If the Bill can help reassure consumers that such fraud will not take place, it will promote consumer confidence and e-commerce in this country.
Whatever we do in legislation, concerns will remain with which legislation simply cannot deal. In an earlier report, the Select Committee expressed concern about what is known in shorthand as the "digital divide", through which the poor and the elderly feel excluded from the internet. It is not easy to legislate for that problem, but public policy should be concerned about it. As public policy makes provision for services, such as NHS services, to become more readily and more easily available on the internet, we must recognise that, for all sort of reasons, some people will for a long time find the internet difficult to use.

Mr. White: Does the hon. Gentleman accept that voluntary groups have a key role to play in ensuring that access to the internet and similar facilities is available to all? I commend the example of Sweden and Finland, which have gone down that route. Does he think that such an approach is useful?

Mr. Baldry: When my colleagues return from Sweden, I am sure that they will bring with them good news about that. I visited a college of further education in Banbury the other day and saw signs for a course entitled, "Computing for the terrified". I have enlisted for the next course that the college runs.
On Europe, it is important that we recognise the value of the European Union's internal market as our marketplace. In so far as the Bill sets a precedent for the rest of the European Community, it will be good news. However, the Standing Committee considering the Bill must recognise that the European single market is our domestic market and that we must consider liabilities and consumer rights in the internal market. I accept, however, that that will involve complex issues, such as when contracts are signed.
Will the Minister say a little more about the e-envoy or e-tsar? Everyone now seems to be a tsar, and I am looking forward to being appointed one. Some of us are not allowed to sit on the Opposition Front Bench, so perhaps a few more "tsarships" could be given out. It strikes me that one of the great virtues of the Russian royal family was that everyone seemed to be related to one other and everyone had a title.
The story of the e-envoy is not a happy one because that seems to be a virtual appointment, and he or she has a role to demonstrate that e-commerce is not all pornography, gambling and electronic boot sales. I suspect, however, that the e-envoy has a very important role, but I am not sure that it has been fully or sufficiently promulgated to the House, to industry or more widely.
If or when the Bill obtains its Second Reading, the Minister and the Department might consider using the vast army of Government information officers to ensure that more work is done in the business pages and in the media generally to explain the Bill, not to those who are already knowledgeable about it, but to the broad sweep of people in business or commerce. They will want more clearly to understand the Government's proposals and what exactly people such as the e-envoy will do.
I have seen the reasoned amendment in the name of my right hon. and hon. Friends, and the Opposition have decided collectively that they must vote against the Bill. As I believe in collective government and therefore in collective opposition, I shall join my colleagues in


the Lobby. Suffice it to say that the Select Committee's recommendations were unanimous and, on behalf of the Select Committee, I thank the Government in so far as they have listened to those recommendations.

Mr. Derek Wyatt: Thirty years ago last month, the internet was born. It connected nuclear scientists in a restricted number of universities across America, courtesy of the Pentagon. I suppose that today we would call that an intranet. A second system was then devised that linked all academia in America. That was our first e-mail system, and it is called the internet.
Eight years ago, however, a Brit, Tim Berners-Lee, working at the CERN laboratories in Switzerland, gave us a brand new language—www, or the worldwide web— and the modern graphical internet arrived to change our lives. Tim, who is not yet Sir Tim or even Lord Web, ought to be a vice-chancellor or a professor of computation in the United Kingdom, but alas he works at the media laboratory at Harvard. Although we have just announced a link between the Massachusetts Institute of Technology and Cambridge, it is a pity that we have not properly enabled Imperial college, which is easily the best science and technology centre of excellence in the United Kingdom. Imperial already outstrips Oxford, and ought to be given university status of its own and the chance to become our own Stanford university. However, I digress.
Before discussing the Bill, I should put on record that I am the—alas unremunerated—non-executive chairman of the council of Clicksure, which has offices in Oxford and Washington DC. Clicksure is an ethical—I must be careful about the use of that word—standards association on the internet which analyses websites.
Last week, on the BBC show "Watchdog", Anne Robinson took great pleasure in upsetting a website called "lastminute.com", which is a brilliant site run by a brilliant UK company. Somehow the "Watchdog" team managed to book two tickets from its site with a dodgy credit card. Had "lastminute.com" been clicksured, that could not have happened. Clicksure evaluates a website to check that it is safe, so that consumers can trust it. That has some relevance to today's discussions of the Bill.
I am also the founder of the World Internet Forum. This morning, we addressed more than 60 ambassadors and their staff on the subject of the forum, which will take place in Oxford next September. The World Internet Forum aims to become a portal for public services in the world.
E-commerce can have the most stimulating effect on a company's bottom line. Let us consider Cisco, the US Nasdaq-listed router company, which worked out that the cost of a conventional invoice was just over $100. When it switched to electronic invoicing, it saved a cool $600 million in the first year because the average cost of the same invoice was just under 50 cents. I wonder where the innovation in this country is when a company such as Cisco can show us the way.
The Bill has been a long time in gestation, but it is all the better for it. It is in three parts, and I shall discuss each one, in reverse order. The last part, which deals with telecommunications issues, is a bolt-on and clears up issues dating back to 1984. I shall not detain the House

further on that because I have noted that the Minister has already agreed to go out to wider consultation on that; and it needs wider consultation.
The middle part, entitled "Facilitation of electronic commerce, data storage, etc.", deals only with electronic signatures, and I want to address the problem of voice signatures. I shall try to explain the new technology that is already on the market, which inverts the www language, and is currently called "mmm". Mmm is part of the WAP—the wireless application protocol. I shall try to explain how it works.
I have said before that the House is not kitted out for the 21st century, but I have here a tri-band mobile phone which is currently on sale in the United Kingdom. It is voice-activated, as most phones are, but in this case I mean that I can gain internet access by talking to it. I can phone a number and by talking via the website on the phone I can ask for the train times from Sittingbourne to Victoria. That information will be voice-activated and sent back to me.
Hon. Members may ask what that has to do with signatures, but what if I were phoning my bank? There would have to be a voice signature for the new technology as well as an electronic signature. I want better to understand whether the electronic signature arrangement adequately covers the voice wireless application protocol. I can see civil servants nodding and I will be reassured if that is the case.

Mr. Duncan: Is not voice recognition a form of unique encryption which is delivered electronically? I therefore guess, and hope, that it is included in the Bill.

Mr. Wyatt: I am getting reassurance from the civil servants who drafted the Bill. Let us wait and see whether that is the case.
I am not quite sure which Department would be responsible for the second part of the technology that I shall describe, but I shall try to explain it clearly. I have here a mobile phone and a credit card. I am sure that hon. Members understand what those things are, but from next year, credit cards will change and will contain a chip. That can be inserted in the phone, and, using the voice mode, I can phone and order money to be downloaded on to the card, or I can tell the card to purchase jeans or anything else that I want to buy.
For that technology to be effective, a third party must hold my details, such as the interests that I subscribe to, which include Charlton Athletic and English rugby. I would therefore have to trust the details of the card to a third-party holder. That is not provided for in data protection legislation. That technology is already available in trials, and 1,000 such phones are on trial in Leeds this week. They are also on trial in Finland and America.
Changes are occurring in the way in which the internet is accessed and credit cards are used. If one says, as the Opposition do, "Let us not have regulation," I reply that we have to be careful not only to explain what is happening to the UK population but to make sure that we


have a proper safety environment. That is why I think that you are wrong, if you do not mind my saying so, about your opposition to that part of the Bill—

Mr. Deputy Speaker (Mr. Michael J. Martin): Order. The Chair is never wrong.

Mr. Wyatt: I wish that I could get away with saying that, Mr. Deputy Speaker.
I want to know, as the technology is currently available, whether there will be an opportunity to include it in the Bill, so that the Bill is the best that we can provide.
That brings me back to the light-touch framework that we have agreed on. The basic issues of the internet are ones of trust. We have to make sure that when we order goods, we receive what we ordered. It is very easy to trust amazon.com.uk. Why? All the credit card companies came together and guaranteed purchases from amazon.com.uk. Unfortunately, not every credit card company will give its guarantee that every one of the 10 million websites can be trusted. We need to develop a common trust—a way of branding a website front page, so that when people see the brand, such as the Clicksure, Consumers Association or "Which?" brands, they will know that the site is safe and secure. The more the Government can do in that respect, the better, and that is what is laid out in the Bill.

Dr. Palmer: As I am sure my hon. Friend is aware, efforts in the United States to develop some sort of kitemark have run into difficulty, because a great many websites display some form of kitemark, but do not fulfil the functions envisaged for it. Does he have views on how we should tackle that problem, so as to prevent our kitemark from being discredited?

Mr. Wyatt: That is a tough problem, and I do not think that there is a technical solution to it.
The first part of the Bill, entitled "Cryptography service providers", is the most interesting. However, I have a problem, and I hope that the Minister will be able to ease my concerns. The internet is global, but in the Bill, we are agreeing a UK signature scheme inside a European framework. Fifty-eight per cent. of our business is in Europe and 12 per cent. in America. What is the validity of a UK signature on the one hand, and an American signature on the other, on an electronic document?
In addition, we have to take into account enlargement of the EU, which currently encompasses 15 countries, but which might include as many as 28 in future. Not all those countries are internet friendly or internet savvy, so what will be the legal position in respect of the directive in countries other than the current 15?
I struggle with the question of where in the world we are to draw up a global standard. I am not sure it will be the United Nations and I doubt it will be UNESCO; it might be the G8, but that might not be fair; I hope it will be the World Internet Forum, but I might be prejudiced. We have to consider the issue, because signatures must be uniform; otherwise, America will determine the rules by default, based on the fact that 90 per cent. of all servers are American and 92 per cent. of all traffic is either American or goes to America. We do not want America to take all the trade, and thus all the tax.
I know that OECD committees are struggling with that issue and with ways in which to account for VAT and corporation tax. My hon. Friend the Minister for Small Business and E-Commerce referred my attention to a commendable Customs and Excise paper that she received on Friday. I hope that it is more reassuring than the telephone conversations I have had with representatives of Customs and Excise.
Let me explain the problem. When ordering CD-ROMs from Amazon.com, one is allowed to order only £18 pounds' worth before becoming liable for purchase tax or VAT. However, the orders go through at such an alarming rate that Customs and Excise would have to treble or quadruple its staff to measure how much VAT was leviable. Hundreds of pounds worth of goods can be delivered to one's home, but one will not be asked to pay any VAT. Where is tax to be paid? How is it to be collected?

Mr. Gibb: When goods are ordered from abroad by phone or by post, if they come in a parcel—as physical goods—Federal Express or whoever delivers the parcel independently and charges the buyer VAT and duty on the goods. There is no difference if the goods are ordered via new technology.

Mr. Wyatt: That is not the case—I have talked the issue through with Customs and Excise. It ought to be so, but it is not.
The other EU-related problem arises from its attempt to base its regulations on country of origin. How big a police force would the EU need to police the net when trillions of deals are done on it every day?
I support the unmetered calls brigade. I know that my hon. Friend the Minister for Small Business and E-Commerce also favours such a move, and I wonder whether she can give us a clue as to how it can gradually be introduced, initially to socially excluded people. A gradual approach, extending over the next two years, should be taken to the introduction of unmetered calls, so that poorer families receive the benefit first.
I have led the campaign in the House to end BT's local loop monopoly. It should be broken up sooner than Oftel recommended. Mention has been made of the Oftel culture, an example of which is that Oftel agreed that the local loop should be broken up, but gave BT 18 months to gets its opposition in first. However, there is no logical reason why the local loop cannot be broken up tomorrow.
I hope I can persuade Ministers to consider how we can become a smarter nation, even though the matter is not covered by the Bill. In 1951, we gave a tonic to the nation, and I hope that in 2001 we can give a present to the nation. The Millennium Commission ceases on 31 December 2000, giving us an opportunity to reallocate the lottery money. I am making a pitch for infrastructure to become something on which lottery money can be spent. It would be wonderful if, on 1 January 2001, we could give every home an internet machine, thus becoming the smartest community in the world. We can afford it, the lottery money is there, and it would be a fantastic gesture.
The explanatory notes to the Bill state that the Government
has set itself targets for making Government services available electronically: 25 per cent. by 2002, 50 per cent. by 2005 and 100 per cent. by 2008. The Government has also set a target for 90 per cent. of its routine procurement of goods to be done electronically by 2001.


Over the past two years, my right hon. Friend the Leader of the House, who has ultimate responsibility for dealing with the millennium bug, and I have engaged in friendly debate. I asked her to produce a league table of Departments to enable us to assess risks from the bug Department by Department. Eventually, a sort of league table was agreed.
In the same spirit, I ask my hon. Friend the Minister for Small Business and E-Commerce to designate a single Minister to be responsible for procurement delivery systems—it would be helpful if it were she. May we also be told the name of the Minister in each Department who is responsible for procurement? As was done in respect of the millennium bug, would a quarterly report to the House be possible, to enable the House to know how each Department was implementing the electronic delivery system?

Mr. St. Aubyn: I was interested to read the hon. Gentleman's comments, published on the BBC news website. He said:
The trouble is that many traditional Labour people come from the public sector and they are the last people to understand where we are on this.
Will he confirm that those were his comments? Does he think that the necessary talent to fulfil such a role is available on the Labour Back Benches? Did he not also say that the Government's approach—to establish an e-tsar and a Minister in the Department of Trade and Industry—was mad?

Mr. Bob Russell: Deny it.

Mr. Wyatt: I should never deny that—it was on the web. It is a serious point that many Labour Members of Parliament have come from the public service sector, and many of those who were elected in 1983, 1987 or 1992 missed the introduction of the internet in their place of business or their public service office. As for the e-tsar and the e-commerce Minister, I have been on record since October 1997 as saying that they should form part of the Cabinet Office.
During our first debate on the internet, in March 1998, I stated my belief that we needed a new Government department of communications; I still believe that. The hon. Member for Esher and Walton (Mr. Taylor) referred to this matter in his speech, but did not seem to know where to take it. The internet would enable services to be delivered better, quicker and cheaper, but it also challenges us with a fundamental question: what is the future of government? As a culture, we have not yet addressed the question of what the internet will do to us, to government and to Whitehall. Massive Departments are not needed if the medium of the internet is understood and utilised to its fullest potential.
I welcome the Bill. It is drafted in the right spirit and is exactly what we need. I congratulate the Government.

Mr. David Ruffley (Bury St. Edmunds): The Bill addresses a subject of monumental national economic self-interest. The significance of e-commerce is difficult to overestimate. The statistics supporting that proposition are certainly worth repetition. It is estimated that in 1998 business-to-business e-commerce amounted to about

$43 billion worldwide. That is predicted to rise to about $300 billion by 2002. The value of e-commerce between businesses and consumers is at a lower figure. It was about $7 billion worldwide in 1998 but it is expected to rise to about $80 billion in 2002. Citizen-to-Government e-commerce is the subject of some not very ambitious Government targets, as my hon. Friend the Member for Esher and Walton (Mr. Taylor) observed. To have 25 per cent. of Government services available on-line by 2001 does not seem especially ambitious, and it does not appear that the Government are leading the way as they should.
It is clearly the Government's duty to ensure that UK plc is in pole position on the information superhighway rather than having to pull over into the information superlayby. Having read the Bill and having listened to my hon. Friend the Member for Rutland and Melton (Mr. Duncan), I am not convinced that the Bill will do much to put us in the first category rather than in the second.
It is a truism that e-commerce is developing so rapidly that legislators throughout the world are finding it difficult to keep up with the pace of change. It is said by some commentators that in a perfect world it would be best for companies if every country had the same law regulating e-commerce transactions. We know that in the real world that would take years to negotiate, if that ever proved possible. We know also that ratification on an international treaty level would be very much a pipe dream. The Opposition have faith in the market and we have faith also in light and effective legislation, as my hon. Friend the Member for Rutland and Melton observed, only where legislation is absolutely necessary.
The Minister for Small Business and E-Commerce said that the industry had welcomed much of the Bill, and followed that up with some selective quotation. She should not get carried away. We have only to read what the Select Committee on Trade and Industry stated in its report, which was published at the time of the draft Bill in the summer. It made many criticisms of the Government but the one that caught my eye was in paragraph 34, which referred to
inadequate political control being exercised over the development and determination of cryptography policy. The policy … has been allowed to drift for too long. It is imperative that Ministers take a firm grip of the issues from now on.
In her opening speech and in her press notice launching the Bill, the Minister was voluble in her near-breathless enthusiasm and excitement about Britain leading the world in the first industrial revolution. She was keen for us to be leading the new revolution. She talked about how important it was to modernise—a key new Labour word— so that we could lead the world again. She said that she was determined "to get e-commerce law right and get it in fast." She also spoke approvingly of how the Bill would become one of the UK's first 21st century Acts.
It has taken the Government two-and-a-half years to get the Bill into the Chamber. We had a draft Bill in the summer which was manifestly a false start. We now have a deeply flawed Bill which has not been completely cleaned up following the draft Bill. I wish briefly to speak about the Bill's defects.
In part I, the Government propose a kitemarked self-regulated approval scheme covering all companies offering cryptographic services. That replaces the original proposal to require all such providers to have a licence, a


condition of which was that cryptography providers would have to hold copies of customers' private encryption keys and provide law enforcement agencies with access to such keys in certain circumstances. That so-called key escrow proposal has been dropped, and I think sensibly. We have heard comments from hon. Members on both sides of the House to that effect. Instead, we now have a self-regulatory scheme which purports to ensure minimum standards of quality and service. A register of approved providers of cryptography support services will be established.
I agree with the Law Society and with my hon. Friends—even the Liberal Democrats chipped in with support on this point—when they say that part I could properly have been dispensed with. In the interests of a lighter and more punchy Bill, we could have done without it.
Part I purports to allow people to check who has sent an electronic message, ensure that it has not been tampered with and that no one has had access to it in any other way. The register will be voluntary. No provider is obliged to apply for approval and the provider who is not on the register is at liberty under the clauses within part I to provide cryptography services. I think that the Minister pats herself on the back by saying that there is a sunset clause in relation to the implementation of a statutory scheme as a last resort. She seems to hope that that will not be necessary within the five-year period.
That does not get away from the fact that there are unanswered questions on part I. First, there is no indication how we can tell whether the self-regulatory regime works. My hon. Friend the Member for Rutland and Melton has asked about that on two occasions. How will it be judged? When the Minister for Competitiveness replies, I hope that he will explain why Ministers could not publish a timetable in advance of this evening's debate for the establishment of the industry-led voluntary scheme. The Department has had a couple of years to get to grips with the matter. I would have hoped we could have more details by now.
The second unanswered question in relation to part I is the thorny issue of fees for certification, which has not been debated very much so far this evening. Fees under the industry-led scheme are still murky. The Department of Trade and Industry said that the scheme should be run on a non-profit-making basis. In its draft regulatory impact assessment, the DTI talked about the difficulties of estimating the scale of fees that approved service providers were likely to be charged. Its excuse was, "We have not determined the standards, therefore we cannot work out accreditation costs." I fail to understand why the Minister cannot give us an indication of the fees that are likely to be charged to approved providers under the industry-led scheme. It is particularly important that service providers which are small or medium-size enterprises are not deterred from seeking accreditation by the level of fees charged.
If the fees are set at a commensurate cost of accreditation—in other words, a flat rate—they may be heavily disproportionate for smaller businesses. Have the Ministers done any work at all on the case for a sliding scale of fees to be set for accreditation so as to reduce the barriers to entry for very small companies? The Department is keen to emphasise how pro-business and

pro-small business it is. Let us have some answers about what it will be doing to help smaller enterprises that seek to enter the market, once the scheme is up and running.
I shall deal next with part II and the admissibility of electronic signatures. The Bill seeks to clarify the admissibility of electronic signatures in legal proceedings, while leaving it to the courts to decide what weight to assign to those electronic signatures at law. That is sensible in principle and we support it.
However, clauses 8 and 9, which introduce that, are rather a dog's breakfast. They empower Ministers through statutory instruments to amend existing statutes to allow for the use of electronic signatures and records, but the decision to allow electronic signatures and records to fulfil paper and writing requirements in existing UK statute depends on individual Ministers across all Whitehall Departments, in their own sweet time, when they feel like it, reviewing all the relevant statutory provisions under their departmental territorial jurisdiction.
As the Society for Computers and Law observed, there are an estimated 40,000 references in existing British legislation to the words "writing" and "signature". The Bill gives no indication of the time scale by which all that will be reviewed by all relevant Ministers across Departments. That is why the Government should ensure now that each Department publishes its priorities for using secondary legislation to update the definition of those words in law. The Government should also be encouraged to publish a timetable by which the review is carried out by each Department. This is too important a matter to rest on the individual priorities of Ministers—many of them hard-working, I am sure. I urge the Minister to consider the matter without delay.
Unless the Government follow the suggested course of action, businesses will be confronted with great uncertainty. They will have the regulatory burden of monitoring the haphazard introduction of amendments to existing statutes, in order to find out which statutory requirements can be satisfied by electronic writing.
In offering that modest proposal, I have the Alliance for Electronic Business on my side. The alliance was prayed in aid by Ministers earlier in the debate, and I know that the Minister for Competitiveness has a great deal of time for it. With regard to clause 8, the alliance states that statutory instruments must be put before Parliament rapidly. It goes on:
Industry would be disappointed if the deadline were set later than the end of 2000. This probably means that work must begin immediately, in anticipation of passage of the Bill.
The alliance continues—and this is the key point:
Our member companies have a number of electronic commerce initiatives that depend upon a legal framework for electronic signatures being in place.
Most importantly, the Alliance for Electronic Business states:
Unless the statutory instruments are laid quickly, those initiatives cannot be implemented, reducing the growth of electronic commerce in the UK and risking the leadership that our industry currently holds in European and global markets.
Conservative Members endorse the concerns of the alliance.
Has the Minister for Competitiveness done any work at all to examine the adoption of the approach which, I believe, is found in the draft Irish Electronic Commerce Act, the Uniform Electronic Transactions Act in the


United States, and the Uniform Electronic Commerce Act in Canada? Those statutes apparently allow all written and paper requirements found in law to be satisfied electronically, except for a limited carve-out relating to documents representing quasi-public legal acts such as deeds and wills. Can the Minister tell us whether any work has been done by the Department which would meet the concern that I flagged up, and which the alliance has also flagged up.
Finally on part II, I am concerned about the way in which the Government view businesses' applications for Government licences or permits, when those businesses make the application using electronic writing. The Government's suggestion is that different fees might be charged for electronic communications, compared with non-electronic communications, because as we know, electronic handling of data is typically less expensive than the use of non-electronic systems. The implication from the Government is that firms and individuals who are able to communicate electronically with Government will benefit from lower fees than those reliant on pen and paper.
From a glance at last year's Finance Bill, we already know that the Revenue proposes a financial concession to those Inland Revenue taxpayers who are able to submit their tax return electronically. Do the Government propose to charge different fees for electronic and non-electronic communication? Will disadvantaged groups, who are not IT-literate or do not have access to IT, be penalised as a result? The Bill is strangely silent on that, but it is a topic that we need to discuss, if not tonight, then in Committee.
In addition, can Ministers clarify the Government's policy regarding discounts for those who use electronic communications when dealing with Government Departments—for instance, in connection with a VAT return or a corporate tax return?
The DTI stated in evidence to the Select Committee:
In the case of a service designed to cover its costs rather than to raise revenue, it might be appropriate for the Government to pass on its cost savings expected from the electronic handling of data to the fee payer.
That is hugely important. Should we take that to mean that the Government will not treat that regime of differential discounts for those who use electronic writing in their dealings with Departments as a revenue-raising exercise? Many Opposition Members are suspicious of the Government and are worried that that may be a ruse for more Government stealth tax in this area, and that any cost savings will not be passed back to the fee payer, but will be trousered or pocketed by the Government in the process of levying fees. We will watch carefully how the Government handle the fee regime.
This is a limited Bill, the more so as part III of the draft Bill now falls to be dealt with by the Home Office. Nevertheless, the defects of the Bill before us are manifest. I trust that Opposition Members will use straightforward common sense to table amendments to remedy those defects.

Dr. Stephen Ladyman: It was interesting to follow the contribution of the hon. Member for Bury St. Edmunds (Mr. Ruffley). I understand the games that the Opposition must play. If the Government

are over-regulating in some area, they must accuse the Government of heavy-handedness and say that they are in favour of a light touch. If the Government decide to take a minimal approach to legislation, the Opposition must accuse them of neglect, and say that a heavy approach is required. If the Government go too fast, they are being hasty. If they go too slowly, they are accused of dragging their feet.
If the Government consult and listen, they are accused of U-turns; if they consult and do not change the Bill, they are accused of arrogance. I understand these games, but this debate is unique in my experience because the Opposition have taken all six positions on the same Bill. Therefore, I am left to conclude that they know deep down that the measure is reasonable, and they are simply doing what they perceive to be their duty: opposing it on any grounds.
Before I proceed, I declare a small interest, which is in the Register of Members' Interests. I have an unremunerated directorship in a charity that provides IT training in the Thanet area. I have also had a long career in IT, and I shall say a little more about that shortly.
The Government should be congratulated on their approach to the consultation exercise. They have introduced a variety of novel methods for scrutinising legislation, including Special Standing Committees and Special Select Committees, and publishing draft Bills. The Government have consulted endlessly on the Bill that we are considering today.
Today's debate has been a bit of an anti-climax for me because when the Government published their initial proposals, I had some major anxieties about them and I imagined myself getting involved in a rebellion and fighting for change. [Interruption.] I did not mean that seriously, in case any Whips are listening. The Government have listened to every point that was made in the consultation process and the Bill is consequently benign, and is supported across the IT industry.
For most of my life, I have worked in jobs related to IT—I have spent nearly three decades in the industry. That is probably a unique record. I started learning programming when punch cards were used. When I did my research degree in the late 1970s, on the site of the National Engineering Laboratory in East Kilbride, the technology had moved on a step and we used punched paper tape. We punched our data or programmes on to paper tape and left it in specific mail boxes around the site. A lady would come round on her bicycle to collect it once a day and she would return it later. When the processing power of the computer was to be upgraded, the most cost-effective method of achieving that was by buying the lady a faster bicycle. The following year, the processing power was reviewed again, and it was decided that the best way of improving the system was to employ a younger lady.
I had a variety of jobs that involved managing and building computer networks. I built one of the first mini computer networks in the country. In the late 1980s, I introduced one of the first ethernets in the country. In those days, ethernet used a protocol called Xerox Network Software—XNS—because the Xerox corporation invented ethernet. Later, I converted it to a new-fangled piece of software called the Transaction Computing Protocol and Internet Protocol, or TCP/IP. It was probably one of the country's first intranets, but I did not realise


that at the time. In the 1990s, I worked in IT management for a major pharmaceutical company. Later, I want to refer especially to my experience there.
I tell the House about these aspects of my past partly to establish my authority to speak about IT matters and to make a case for being considered as a member of the Standing Committee on the Bill. I also want to bring home the point that the pace of change in the industry has been so dramatic that the complexity of computer systems and the available processing power has increased by a factor of about 1,000 in a small part of one man's career. We cannot even begin to imagine the shape of computing if the pace of change increases by a further factor of 1,000 over the next 20 years. Can anyone begin to contemplate the future of business and IT in those circumstances?
In our deliberations on the Bill, we must be careful to include nothing that will hold back the pace of change or tie us to obsolete legislation as technology moves on. We cannot use the law to restrict the pace of technology; we can only hope that the law will harness it for us.

Mr. Gibb: Given the hon. Gentleman's experience in IT and in view of his comments, does he want part I of the Bill to be enacted, or would he prefer that it was not enforced?

Dr. Ladyman: The hon. Gentleman pre-empts one of my points. I may be alone among hon. Members in worrying about the Government's intention to allow self-regulation. I doubt whether that will do the job. As I said in European Standing Committee C recently, in my experience, many people who work in IT believe that they cannot make mistakes. They see themselves as being in total control of the technology, knowing everything about it and being able to devise systems that contain no errors or loopholes. It is only when managers become more experienced that they realise that everything has holes in it and can be overcome. Therefore, I wonder whether there is a case for the Government to prescribe who is a trusted third party, establish the rules and ensure that the third parties are policed and the system monitored. I hope that the Government are right and that the industry can devise a system for self-regulation. They are certainly right to retain the power to regulate the industry if it does not come up to scratch.
The Bill has improved greatly during the consultation process. Mandatory key escrow would have been disastrous for many reasons, not least for civil rights reasons although, as the hon. Member for Esher and Walton (Mr. Taylor) said earlier, key escrow can benefit some industries. I can envisage circumstances in which the pharmaceutical industry would find key escrow beneficial. Therefore, the Government are right not to make it mandatory, but it should remain an option for industries. We should not simply say that it has no value.
I do not believe that many industries that exist in a heavily regulated environment will support the Opposition amendment, which claims that the Bill provides for unnecessary regulation. One of my key tasks in the pharmaceutical industry was to help to devise computer systems that could manage the publication of the regulatory documents that the industry had to put together.
To get approval to sell a drug in this country, an international regulatory dossier has to be produced. In the United States, such a document is called a new

drug application. An international regulatory dossier will certainly extend to tens of thousands of pages, but in the United States, where the raw data are produced for the regulatory agencies to go through and there is no process of reducing that data, documents running to hundreds of thousands of pages have to be produced. When I started work in the pharmaceutical industry, such documents were pumped out on printers and typewriters and armies of people stood at photocopiers all day long producing copy after copy after copy. One used to turn over the largest conference hall operated by the company to the collation of all that paperwork and eventually—when the 12 copies of that huge document were all bound and the 100,000 pages were in the right order and catalogued—someone would come running in and say, "I'm sorry, we've dropped a page and there is a new page 5. We have to go through the whole document again." It would then have to be put into removal vans to be taken to the regulatory agencies.
That process was obviously crying out to be computerised, which it now is. I do not know whether the same situation still pertains, but a couple of years ago— even though it was possible to produce an electronic review aid for such material called a computer-aided new drug application in the United States and a computer-assisted product licence application in this country—a paper copy of the document had to be printed out for someone to sign and authorise as the true copy. For all legal purposes, the electronic version was never the true copy.
There will be a cost saving to the industry because it will be able to produce an entirely electronic version of its regulatory documents—with an electronic signature— and use something that the House has not focused on in the debate: the ability, if one is using public and private key encryption, to encrypt an entire document. For the first time, not only will a document carry a signature on the last page saying who has produced it, but there will be a way of guaranteeing the authenticity of that document, from the title on the first page to the last full stop. That is what the industry is crying out for and the Bill's key function is to make such provision. I would not call such measures over-regulation, nor would the pharmaceutical companies and the defence industry; they represent a much-needed improvement to the way in which companies work—one that they will be able to use in the future.
The Government are also to be particularly congratulated on their work in another area. There was some talk from the hon. Member for Rutland and Melton (Mr. Duncan), the Opposition spokesman, about the complexity of the Bill's wording, but the parliamentary draftsmen have been particularly astute in clause 7. Nothing in that clause will have any detrimental effect if technology changes in the near future. If we were to use such technology now, we would probably use some form of private and public key encryption to achieve our aims, but in five years there may be a far better way of achieving them, or certainly a different way. I understand that the clause would be just as valid whatever form of technology was deployed and the Government should be congratulated on that.
The Bill should not be considered in isolation because it is not enough alone to achieve successful IT and e-commerce industries in this country. In addition, we need the regulations that are currently being considered


by the European Union and were recently discussed in European Standing Committee C. Those regulations will govern such things as where a contract is made, if one is ordering from an internet site, as well as further extending the way in which we view electronic signatures. I have some concerns about the way in which that debate is developing and I believe that, in certain circumstances, internet service providers are fulfilling the role of either a retailer or a wholesaler. Sometimes, there should be a contract between a customer and the internet service provider, never mind the person who provides the goods being sold through the internet service provider. I am not entirely sure that the EU regulations have got that as clear as it ought to be.
We need this e-commerce Bill and the regulations that the EU is considering, but we also need the TrustUK hallmark, which my hon. Friend the Minister discussed earlier. I consider that to be absolutely vital. If we want customers to use an internet service to buy material, they have to have absolute trust in it. As hon. Members were speaking, I made a list of what I would look for in a site before I would send it my credit card details. I would want to know that the company had quality management and that its technical back-up and management was of an appropriate quality so that security issues would be dealt with appropriately. I would want to know about the probity of the company, its financial backing and integrity, the quality of the goods, the exchange policy for the goods and the reliability of supply. The final two issues of course, are cost and range of choice.
The only two requirements effectively available to small businesses or start-up companies would be cost and range of choice. People would not have heard of such companies, so there would be no way in which they could satisfy the first seven requirements in the mind of the customer. Companies such as Marks and Spencer are going on to the internet because they know that their brand name is a guarantee to customers. People will be prepared to shop with Marks and Spencer in a way that they would not be prepared to shop with Bloggs and Co, or any other company that might have decided to set up on the internet.
It was particularly unwise of the hon. Member for Rutland and Melton to imply that the brand name and reputation of a particular company would make it acceptable for people to trade with it in an unregulated environment. He was saying, "If you're a new business, go away; if you're a start-up company, go away; if you're a man in the street who wants to set up an internet site, go away."

Mr. St. Aubyn: Will the hon. Gentleman confirm that there are now virtual shopping malls where a business can set up shop and come under the umbrella of a recognised method of selling via the internet? When people purchase a product through the internet, they probably use a credit card. The credit card companies ultimately take the risk, because they guarantee that their customers will not get ripped off on the net. Is it not the companies at the heart of the system that are at risk, not the customer or the small guy who is trying to get on the bottom rung of the ladder?

Dr. Ladyman: The hon. Gentleman is right, and he makes a good point about shopping malls. If credit card companies guarantee products on behalf of companies operating from those malls, they will charge a commission

for that service, and a small business may not want to pay that. As the hon. Gentleman said, people can pay with a credit card. I have a credit card that I use only for internet shopping, so that I can check the bill carefully and make sure that I am not being cheated. On the other hand, how many people realise that debit cards with a little Visa sign on them, which often look like other credit cards in their wallets, are not covered by the same credit protection legislation? People may shop with a debit card thinking that they are getting the protection to which the hon. Gentleman referred, but they have no protection at all. Indeed, they may be in a worse position, because their debit cards may give away bank account details to unscrupulous people. What the hon. Gentleman says is true to a certain extent, but the Conservative party has not thought out its opposition to the Bill as well as it should have done.

Dr. Palmer: I agree with my hon. Friend about the Opposition's position on new companies and the bias towards certain trade names. Does he agree that having an established brand name is not necessarily a guarantee for the customer? For instance, the Conservative party has a website. If he were to check it against his nine criteria, it would fail all nine.

Dr. Ladyman: My hon. Friend is right to remind me that not all brand names are as reliable as others.
I believe that the Government have listened to representations made to them. Had they rushed into this legislation, as some Conservatives wanted, we would have been saddled with a Bill that would have been wrong. They have done the right thing by listening, and they have adapted the Bill appropriately. As someone who is experienced in the industry, I am delighted to say that I shall support it tonight, and I hope to have further to do with the Bill at later stages.

Mr. Nick St. Aubyn: Despite an element of partisanship in some of the remarks that we have just heard, I count it a privilege to participate in a debate in which hon. Members are so evidently knowledgable about their subject. It is a tribute to the House that we have so many Members with outside interests who are engaged at the forefront of new developments in commerce.
Like other hon. Members, I have some interests to declare. They have spurred my interest in e-commerce, and have helped me to realise the potential of this new world. I am chairman of a joinery business in the west country that has recently set up its own website. In our own small way, we see the advantages of the Bill and the development of e-commerce for our business, because it enables us to extend our network of contacts.
Through the Industry and Parliament Trust, I am currently involved in a fellowship with DHL, the international company that provides a delivery service overnight around the world from business to business and business to consumer. For that company and their many competitors, there has been a revolution in expectations and in the way in which they do business. One of the results of the growth in e-commerce is a demand for business to consumer and business to business delivery services. Those companies are set to grow rapidly.
I am privileged to represent Guildford, which is at the forefront of new technology. The town is recognised as one of Britain's leading centres for the development of


software. Not only do we have access to telecom lines, but more than 60 per cent. of houses will have cable access by the end of next year as an alternative and more efficient means of reaching the new technology.
I come to this issue from a different angle. I sense that our country is on the threshold of a golden opportunity to become a centre for e-commerce in Europe, just as, 20 years ago, we had a golden opportunity to become the financial centre of Europe. We realised that under the Conservative Government, and we are now Europe's financial centre. Indeed, we are one of the world's leading financial centres. With our English-speaking world contacts and our international outlook due to our history, the key event that virtually guaranteed that we would be Europe's financial centre was the fact that, in 1979, the Conservative Government abolished exchange controls. We deregulated: we opened up this country and this city, and it became a success story in the world of finance.
What are the Government doing? They are introducing new regulation in part I, and attacking the source of future potential—the people. They are attacking the people in IT through IR35. They will drive thousands of the most able people with IT skills out of the country, and they will drive them out over a petty tax point. We want them not to spend the money that they are earning, but to accumulate it in their businesses and invest it in the future of e-commerce.
There is no comparison between someone who works in IT, earning many thousands of pounds, and someone who is an employee with all the rights and guarantees that are granted to such employees, whether that person is working in a hospital, in a school or in any other profession. Those people's jobs are on the line every day. They are negotiating for new contracts with new companies; they do not know where their bread will be buttered in two years, or one year, or, sometimes, one month. What they do know is that, if they can retain the earnings in the companies that they have set up, they can invest those earnings to enable their businesses to grow, and to ensure that this country takes the opportunity to become a centre for e-commerce in Europe.

Dr. Ladyman: Will the hon. Gentleman accept from someone who employed an awful lot of contractors in his time that, relatively, most have exactly the same rights and privileges as company employees? They are usually taken on because companies do not wish to show head counts on their accounts. There are mechanisms for avoiding costs to large companies, which have been passed on to those people. They will continue to work in this country and contribute to the IT industry even after the change.

Mr. St. Aubyn: I have no doubt that some people involved in providing IT services to companies will stay here after the implementation of IR35, but those who have the most opportunity, who are the most able, and who have the most need to retain earnings and investment to develop their businesses and the potential of e-commerce are those who will go elsewhere. It is a fast-moving environment. No one can afford to give up a competitive advantage, or to give in to what the Government are

doing. The Government are telling them that they are merely employees, but in fact they are entrepreneurs at the forefront of what should be a golden opportunity.

Dr. Palmer: Will the hon. Gentleman give way?

Ms Hewitt: rose—

Mr. St. Aubyn: I want to develop my point, but I will give way to the Minister, for whom I have a great deal of respect.

Ms Hewitt: I am grateful to the hon. Gentleman. Perhaps he would care to tell us whether he endorses the advice given by at least one computing magazine to some IT sub-contractors to take from their earnings no more than just over £4,000 in the current tax year, and to take the rest in dividend payments, thus avoiding any national contributions on all their income. Does the hon. Gentleman support tax-dodging of that kind?

Mr. St. Aubyn: I am sure that the Minister would not wish to describe a perfectly legitimate exercise as tax-dodging. If she wants to prevent or discourage companies from implementing such a dividend policy, let her by all means introduce a specific rule to deal with that point, but people in the world of providing services should not be prevented from setting up companies and accumulating capital to develop bigger and more successful businesses, which is what the Minister's Government have managed to do in a cumbersome, clumsy way in introducing IR35.

Dr. Palmer: Will the hon. Gentleman give way?

Mr. St. Aubyn: No, I will take no further interventions.
The Bill is not about IR35; it is about e-commerce. Speaking to a group of Members of Parliament last week in the environs of the House, the managing director of Unilever, Mr. Richard Greenhaugh, said:
We need an internet that is allowed to grow rapidly with competition restraints which are minimal.
The problem with the Bill is that the competition restraints may be very real and very large.
It is not good enough for the Minister to tell us that the powers in part I of her Bill are reserve powers. We have seen the same Jekyll and Hyde trick from the Government before: they have tried to present two faces at once. We know that tonight the Minister has drunk from the bottle by her bed marked "light touch", but we also know that there is another bottle marked "regulation potion". We are very worried about when and where she will drink from that bottle and come back to the House with a very different look in her eye. We fear that she may announce, without sufficient debate, without a further Bill, and without proper consultation, that she will take a sledgehammer to this business and, in effect, drive it off our shores.
The problem with the light touch and with self-regulation is that they require strong nerves. In the fast-moving world of e-commerce, there will be occasions when people make mistakes and things go wrong. It will be easy at that time for the Minister to come to the House and to justify part I, saying that she is going to enact it. That will probably be the wrong thing to do.
There were occasions in the 1980s and 1990s when financial institutions were in trouble. They made losses. Indeed, on one or two occasions, taxpayers' money was used to prevent those losses from getting even worse, but let us compare that with the position in countries that had far more heavily regulated financial sectors. They had just as many problems. The difference was that taxpayers had to foot a much bigger bill to put them right because their Governments had said at the outset that they were responsible for ensuring that nothing would go wrong. When it did, billions of pounds, or rather billions of dollars and tens of billions of francs were spent to try to redress the mistakes of Government, not just of businesses. The danger of regulation in such a new sphere is that the Government will find that it is underwriting activities that they do not understand and cannot control until it is too late and until taxpayers' money has been taken for a ride.
Part I depends on decisions by Ministers, yet we heard criticism after criticism by the Minister of her Department just months before the Government came to office. Why is she so confident that, under her management, the Department of Trade and Industry will always get it right in the sphere of information technology and e-commerce, when she has told us how wrong its original proposals on encryption were in 1997, a point with which we agree?

Ms Hewitt: In case anyone might be misled by what the hon. Gentleman is saying, let me make the position clear. I was criticising the policy of Ministers in the previous Government. As a Minister, I take responsibility for policy decisions. As the hon. Member for Esher and Walton (Mr. Taylor), a former Minister, said earlier, my officials have always done an excellent job and, I am certain, will continue to do so. I was complaining about the policy decisions of the previous Government.

Mr. St. Aubyn: The policy of the previous Government just before the election was to issue a document for consultation and to come back with legislation. The Minister's policy is to introduce the clauses before there is any need for them and before there can be meaningful consultation about the need for part I.
Ministers do sometimes make mistakes. Our Front-Bench team has been big enough to admit that our first thoughts on the subject two and a half years ago, when the development e-commerce was a small cloud on the horizon, may have been somewhat askew. We have learned the full lesson from that mistake. The Minister and her Department have only half learned it. If they had learned the full lesson, they would never have come before the House tonight with part I.
We know about the saga in the summer with the Lord Chancellor. He gave the green light to the Brussels convention that will kill much of e-commerce's potential in Europe. If, under the convention, a business here with a customer in another European Union state were subject to the law of that state when it struck a deal over the net, that would stop it doing business with large parts of Europe. Many businesses that are happy to receive customers from Italy, Greece and other countries would think twice if they thought that the terms of contract that they had agreed would ultimately be determined by a law in Italy or Greece, rather than by one in this country. That is not to be a little Englander, but to reflect on this country's immense reputation, to which the hon. Member

for South Thanet (Dr. Ladyman) alluded, for having the highest possible integrity when it comes to our system of law.
Another reason why we could become a centre for e-commerce if there is a sane system of developing the law of contract in Europe is that when people around Europe decide that they want to enter an agreement, they will want to do it under English law because they know that it will be fair to all sides. That is a good reason why we stand an excellent chance of developing a centre for e-commerce.
That will not happen if ideas such as the Brussels convention come into force. The Lord Chancellor was perfectly happy for the convention to proceed. Such misjudgments suggest that part I might be allowed to proceed on the wrong grounds and with the wrong judgment through an agreement by the Minister or one of her colleagues in the near future.

Mr. Ruffley: Has my hon. Friend wondered, as I have, whether the Minister was even notified that the Lord Chancellor's Department was going to take such action?

Mr. St. Aubyn: My hon. Friend makes an excellent point. The Minister owes it to the House to answer it. In the so-called joined-up Government, was there anything joined-up about the decision making of the Lord Chancellor's Department? Did the Lord Chancellor consult with the Department of Trade and Industry beforehand? If he did, can the Minister confirm that she agreed to his decision? What does that tell us about her competence and that of her officials in managing these important matters?

Dr. Palmer: I do not necessarily disagree with the hon. Gentleman's view that the jurisdiction should be that of the vendor, but does he agree that there is a dilemma? It is conceivable that a medium-sized firm, a large firm or a member of an industry association would feel able to deal with customers with a reasonable familiarity of the law in other countries, but it is barely conceivable that the ordinary consumer will feel comfortable with operating under the law in other countries. The logic of the hon. Gentleman's argument is that, if somebody in Greece buys something from a British company or somebody in Britain buys something from a Greek company, they must in principle be willing to accept whatever rules prevail in the other country.

Mr. St. Aubyn: I do not have a crystal ball, but I believe that the trade between countries will be primarily between businesses. Consumers will look to firms in then-own country, albeit on a website rather than in a high street shop. The hon. Gentleman's point may prove to be pretty arcane.
According to figures supplied by DHL, e-commerce was worth $45 billion in 1998 and the latest projections suggest that it will reach $1.3 trillion by 2003. That is five years ahead of the projections made by the DTI committee only a few months ago. The scene is changing very rapidly. The sector is dynamic and it has tremendous potential.
DHL also pointed out that the cachet of the "Made in Britain" label will be very strong. If the hon. Member for Broxtowe (Dr. Palmer) is right and people are hesitant


about dealing outside their own jurisdiction, they might still be prepared to deal with products made in this country under contracts made in this country, because our legal system has such an excellent record of fairness to those who come to this country from outside.
Another factor is that we are very wired. The latest thorough survey shows that 40 per cent. of adults in the UK have access to the net. It is estimated that in the past month alone, 20 per cent. of all adults in this country used the net. The greatest usage is among two groups. Some 70 per cent. of 16 to 24-year-olds are on-line. The other day, I was visiting the Universities and Colleges Admissions Service headquarters in Cheltenham, where I was told that its reference bible for college courses will be a virtual manual from next year. There will not be a printed version. Everyone who wants to sign up for a college or university course will go through the net to UCAS. They will find an excellent site, where they can state their area of interest. The search engine will deliver to them all the colleges with the courses that they are looking for.
If they want to find out what sort of character is going to go to that university or college, they can call down from the database a map of Britain, showing the proportion of students coming from each part of the country. There is tremendous power in this new technology, and UCAS is at the forefront of it.
Some 70 per cent. of graduates are on-line. I am not asking the Labour party to buy the trickle-down theory, but these groups are the leaders and shakers in society and will be the spearheads of a much-wider usage. We do not need to have angst about how many people use the net today. Anyone can drop in to a net cafe in the high street and get access or an e-mail address for nothing from one of the providers. This is an accessible medium already.
As a country, we are good at taking on new technology. We have a great deal more success with mail order magazines selling new ideas than other countries in Europe. However, according to the last estimate, our consumers are two years behind those of the United States. I visited the US a month ago, and people can talk about nothing other than e-commerce; it gets a bit tiresome after a while. Nevertheless, one got the sense that consumers over there are getting plugged in. Although we are behind, it will be less than two years before this country reaches the stage that America is at today.
Britain has a golden opportunity. We have the will, the potential, the background, the reputation and the skills. We also have a driving need. The downside of e-commerce is that the world of financial services—which has brought so much prosperity to this country and this city—will be shrunk by e-commerce. Many of the services carried out today in the City of London will not exist in five years—certainly within ten years. There may be just one financial centre, if there is any need at all for a financial centre in the world. If so, it certainly would be New York.
We need something to replace the financial services economy that has motored our economy and made us all richer in the past two decades. We must not only aspire to become a centre of e-commerce. We must become a centre of e-commerce if we are to fulfil the potential of the economy. That potential was the golden legacy of the

previous Government, and tonight, the Minister yet again is putting it under threat by her measures, which will impose regulation and restrictions on the power and dynamism of the British people.

Dr. Nick Palmer: I wish to declare a mini-interest. I am the keynote speaker at a number of conferences on electronic commerce and its regulation. It has not happened yet, but eventually I may be paid for one or two of them.
There is a huge world market to be facilitated by legislation such as this. I will not repeat the statistics given by other hon. Members, except to note that the total number of internet users expected next year is 250 million, which is larger than the population of the United States. If one considers the attraction to a business of marketing itself to the entire American population, and then considers that this market is a larger opportunity, one can see why any business must get into this area.
The industry has given a broad welcome to the salient points of the Bill, and we are all familiar with aspects of it that were not popular. It is generally accepted that reasonable compromises have been made, and there is little appetite for delay at this point. Opposition Members gave reasons for that, which sits oddly with the rather mysterious reasoned amendment, which appears to suggest that legislation should not proceed until we have had a chance to study the interaction with European directives that are not yet entirely clear. If we were to make the amendment, it would not be possible to proceed and we would have to delay, with all the adverse consequences mentioned by both Government and Opposition Members.
It is crucial for any business, political organisation or Government dealing with the internet not merely to recreate the existing ways of working but to adapt them to the new situation. Similarly, we need to adapt the legislation. It is a broadly accepted truism that legislation on-line should be the same in most situations as legislation off-line.
That was agreed by the G8 as one of the principles and has been quoted rather glibly in many contexts, but there will be situations in which it is profoundly difficult, because if we want diverse national legislation to coincide with the equivalent on-line legislation we will require that on-line legislation differs in different countries. One of the Government's objectives should be, and I think is, to achieve sufficient convergence within European consumer protection and contract legislation to narrow the discrepancy between what is accepted in each country and what is accepted across the countries.
The Gartner group and others have worked out that there are 40,000 mentions of the words "signature" and "writing" in British legislation, and some have suggested that the Government should impose a timetable for perusing and, if necessary, correcting all those mentions, although it has not been made clear whether we should simply hold up our hands and give up if that timetable is not met.
I want to draw on the suggestion made by my hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) that we have quarterly reports from each Department on progress in implementing that mammoth


task of legislative revision. It should not be left to individual Ministers to pursue it as and when time is available.
The location problem often comes up. Some groups say that the difficulty of identifying where the seller and the buyer reside makes it extremely difficult to have any rules for internet commerce based on national jurisdiction. It is not clear what jurisdiction would apply to a virtual vendor floating in cyberspace. That is a genuine problem but perhaps not so great a one as has been maintained.
An elderly couple in Beeston in my constituency called me to say that they frequently had calls requesting phone sex. A Californian company that specialised in a sex website was advertising the services of girls based in Guyana. To dial Guyana from California, one uses the dialling code 01159 and if one dials that code in Britain, one gets Beeston and my constituents. I wrote an e-mail to the company and said that it was unlikely that my constituents would send it royalties and that it was losing business. Overnight, the company changed the website to give the correct dialling code from Britain.
That example shows how international internet commerce can hit the vendor in a way he had not expected, how it can hit the buyer in a way he had not expected and how it can hit third parties, who might barely have heard of the internet. If we add to that the possibility that it is not clear whether the website operators are in California, Guyana or Britain, the problem of jurisdiction becomes clear. However, in any contract between two genuine parties, neither of whom seeks to defraud the other, it should be possible to establish the jurisdiction without great difficulty.
As a basic principle for what is unattractively called the TrustUK mark, which will become the TrustEurope mark, I suggest that people who wish to benefit from the mark should state where they are located for the purposes of jurisdiction. As the hon. Member for Guildford (Mr. St. Aubyn) suggested, people based in Germany, Honduras or Guyana might deem it desirable, for one reason or another, to base themselves in Britain for the purpose of jurisdiction—perhaps to appeal to British customers. That would be welcome.
If one of the parties seeks to defraud the other—for example, if the vendor is selling a product that does not exist or the buyer is seeking to get the product without paying for it—the indication of location may be false. That narrower problem can be specifically addressed by the police using credit companies to locate the true address of the person involved. Fraud is a specific case, and there is no need to wreck the whole principle of location and jurisdiction for that alone.
When we set the requirements for the TrustUK and TrustEurope kitemarks, I suggest that we say, first, that the location for which jurisdiction applies must be given; secondly, that if no location is given, the purchaser's location applies; and, thirdly, that it is an offence to give a false location.
I welcome the proposals and the industry as a whole, to take a realistic view of what has been said, is enthusiastic about part II. The industry is also willing to accept part I, because it recognises that it is a reasonable compromise and that the Government cannot altogether give up the possibility of legislation should self-regulation not be sufficient. I commend the Bill to the House and thank the Government for introducing it.

Mr. Mark Todd: The internet has offered numerous small companies the opportunity for development. It has been the foundation for enterprise and, although originally developed from the seed of public sector investment, has been very much the epitome and the cutting edge of free enterprise in recent history. That needs saying because it is one of the foundations on which I tend to base any thinking about the impact of legislation in this area. Based on the track record, Government should keep as far away as possible from regulatory interference in that activity. I will judge the Bill against that criterion and, although I have some qualms about the first part, I think that it will pass that test.
The internet is a vital framework for productivity improvement and for simplifying the processes between all sections of the industrial supply chain. As a number of hon. Members have said, it is a critical tool for revolutionising the efficiency of many businesses in this country and internationally. Another attraction is that it provides an extremely low entry barrier to business start-up. That is one reason why it has been the epitome of small business enterprise development: developing from nothing, businesses can be sold on the stock market for astonishing amounts and then, quite often, they disappoint those who buy them.
What is needed to make the best of this? The first principle is for the Government to step back from involvement. That is a difficult task in this country, because we tend always to consider ways in which to regulate, control and direct. That is an instinct from which we must refrain in this sector. We have seen it in the Bill's development; I commend the Government on the long consultation process. The publication of a draft Bill, careful consideration of Select Committee recommendations on two occasions and a good deal of interest in what the industry said have all helped to shape a Bill that is far better than it otherwise would have been. I agree with my hon. Friend the Member for South Thanet (Dr. Ladyman) on that. When the Bill was initially mooted, my ability to enter the Lobby to vote for it would have been tested, but that is not the case now.
Another key issue is to regard the Bill as being about information and people, not technology. When I was an IT director, I had constantly to persuade people that their obsession with how something would be solved technically should not occupy their time. The key issues were: what information did they need, and how were the people who would use that information to be trained and helped to use it most effectively? We could find solutions to the technology—that was not much of a problem. The difficulty was having the imagination to conceive the human solutions of organising a business to take full advantage of what was available. Some of the contributions to the debate have contained interesting digressions into technological aspects, but I do not believe that they are the foundations of electronic commerce in this country; they are not critical benchmarks for its success.
What else do we need? Trust and security have been mentioned as key criteria. We cannot ever have absolute trust and security—they can only be relative. My hon. Friend the Member for South Thanet ran through the criteria to consider when using a credit card. One could apply the same rules when buying over the telephone. How do we judge the difference between those two


purchases? We do not know the person at the other end—he or she might record our credit card details and misuse them, or store them in an inappropriate place and abuse them. Those factors run through people's minds but they have gradually become used to the idea.
People are often driven by their trust in a brand name. That point has been made several times in this debate, and rightly so. A brand name, to me, is one of the critical indicators of trust. That is tough on small businesses, which must sell their products by other means, such as innovation, the excitement of their marketing message and strategic alliances with other businesses that can offer that trust. It is a natural instinct for customers to look for something that they can trust. That is one of the reasons why some websites are more successful at attracting people than others.
We also need flexibility. In that regard, the Bill qualifies for some solid applause. A good deal of reliance is placed on the opportunity to pass secondary legislation in due course, if that proves necessary. Normally, one would be suspicious of that approach, but in this instance it is absolutely essential and necessary. It would be demanding too much to require that time be found for more primary legislation in the future. Sensibly, the Bill gives Ministers a variety of powers to produce regulations to cover all aspects of the matter, and that is the wisest approach. The principle of flexibility has been adopted in the Bill.
Leadership by the Government is vital, as the hon. Member for Esher and Walton (Mr. Taylor) noted earlier. The Government have recognised the need for a strategy on information technology, and that is an innovation in this country. No such strategy has existed here before—a woeful omission that has led to some of the appalling IT failures of the past couple of years and before.
A clear grasp of how to organise the delivery of information technology requires that there be a relationship with Government policies, as an IT strategy must be founded on what we are attempting to put together for and deliver to our citizens. Moreover, the strategy must be founded on processes, rather than on Government Departments. The important thing is the way in which information flows across activities, rather than how it is channelled through departmental funnels. An IT strategy must be focused on citizens and not on civil servants, and on freedoms rather than restrictions.
Those are the criteria against which I shall judge the strategy when it emerges, but I welcome the commitment to produce such a strategy, which will be the foundation for effective electronic commerce in Government. That is one of the key areas: it must be possible to conduct transactions with our Government by electronic means, and the Bill sets targets for that. It states that 50 per cent. of dealings with the Government should be delivered by electronic means by 2005, and 100 per cent. by 2008.
If I were to set the benchmark in that regard, I would judge performance in terms of the reduction in all dealings with the Government. The Bill sets target dates by which certain proportions of the various Government functions should be dealt with by electronic means, but we should be ensuring that the processes of Government are made so much more efficient that it will no longer be true to say that the same information can be found in

130 different places in the Government structure. We should be able to change a piece of information at one stroke, rather than through multiple contacts. That benchmark is not contained in the Bill, but it is a critically important foundation for success.
It is clear that core standards are needed, in data storage and in the methodology by which we choose to develop systems. The foundations are still being built, but they will determine how successful we will be in delivering electronic commerce at Government level.
That we must work towards international agreement has been stressed several times in the debate and I shall not dwell on the point. However, I recall from my university days the concept of socialism in one country, and we are in danger of developing electronic commerce in one country—a rather short-term achievement. We must lay the foundations for effective trade across international boundaries.
We also need a realistic and proportionate approach to the regulatory process. That again depends on the Government having a light touch in assessing the risk of something going wrong and the need for intervention.
I have listed the key elements that we must get right. By and large, the Bill is a commendable shot at a fast-moving target. The British instinct for control and regulation has largely been restrained, and I commend the Bill to the House.

Mr. Ian Stewart: I am pleased to be called in this debate; I apologise to the House for not being present earlier. Sadly, I had to attend the funeral of my good friend Councillor Arnie Holt. I beg the House's indulgence if I cover points made by previous speakers. I will try not to dwell on the Bill's technical aspects, which have been adequately covered, and address instead some of its wider social and educational implications.
Of the 28 Bills announced in the Queen's Speech, the Electronic Communications Bill was listed first. While its key provisions relate to e-commerce, which I expect has been the focus of this debate, its title is right because it is not just about commerce and how the United Kingdom can and should be the global leader in electronic business but about communication, the spread of knowledge and enabling the development of society in general.
Like other hon. Members who have spoken, I have a keen interest in information, communication and enabling technologies, or ICE-T as I refer to them. I have an Industry and Parliament Trust fellowship with IBM and am a member of PITCOM, the parliamentary information technology committee. With PITCOM, I have travelled to France, Canada and Japan to report on how other countries, and particularly their Governments, are harnessing new technologies for the benefit of their citizens.
I am enthused, excited and passionate not about the new technologies but about what they can and will do to assist people and enhance their lives. I am not a techie or a geek but I am very definitely a people person. I can see the opportunities and widened horizons that the new technology can deliver for people in my constituency and throughout the UK—not only opportunities for their businesses but for their education and the better delivery of local authority and Government services.


My constituency is, to use census jargon, under-represented in the professional, managerial and technical social groups. I want the benefits of information, communication and enabling technologies to be available to all my constituents, not only those who own their own companies or who can afford a computer at home.
I welcome Government moves to allow public institutions such as schools, further education colleges, libraries and citizens advice bureaux to take advantage of lower rate internet access. That should allow groups such as the Salford forum for older people and the Eccles afternoon townswomen's guild, whom I met this week, access to information, both general and practical.
Three categories of transaction were defined in the Trade and Industry Committee report on e-commerce published in July: business to consumer transactions; business to business transactions; and citizen to Government transactions. The Committee reported that in the United States a fourth was found: consumer to consumer transactions, such as on-line auctions. With our local climate in Salford, they could be a welcome alternative to the early morning car boot sale. Much human activity, business, education and leisure is encompassed by this debate.
The Bill had a previous incarnation only a few months ago, since when the Government have consulted widely and amended their proposals. IBM, with which I have an IPT placement, commented:
we're delighted that Ministers support an industry led approach to developing trust in emerging technologies and services. It's now down to industry to take forward its T-scheme"—
the industry voluntary scheme—
initiative not only to meet e-commerce requirements in the UK but also to serve as a model for countries in Europe and worldwide.
In the north-west, we have been at the forefront of developments in information, communication and enabling technologies. I am the pilot MP involved in the GEMESIS—government, education, medical, industry, social information superhighway—project. It is based at Salford university and provides electronic commerce support to businesses across the north-west. As an integral part of GEMESIS, a virtual chamber of commerce, called the virtual chamber, or TVC, has been developed in conjunction with Manchester training and enterprise council, Manchester chamber of commerce and industry and Cable and Wireless. The chamber now has 140 subscribers.
Salford university plans to become a virtual university of industry for the north-west, with a special emphasis on the way in which open, distance and flexible learning can be used across a broad-band network to encourage small and medium-sized enterprises to become more innovative and wealth creating. In March, my right hon. Friend the Secretary of State for Trade and Industry visited the GEMESIS project, and praised its ground-breaking work. He pointed out that such work should be disseminated throughout the country. The recent award of an extra £1.7 million for the project—including money from the European regional development fund—will help to make that a reality.
My local authority of Salford has its own information society Portal initiative, in partnership with Oracle, called "People not Technology", to ensure that the city council, its employees and the people of Salford have the opportunity to realise the potential of technological

change—to make those technologies work for them and help to improve their lives. Developments include the introduction of a city-based in-house call centre—currently operating in the environmental services directorate. In the first months of operation, responsiveness improved by more than 75 per cent. Next month, a pilot one-stop shop will open—a multi-service site with a cyber café. Salford city council has the ambitious aim of meeting the targets that the Government have set for themselves for making services available electronically—100 per cent. by 2008. The council hopes to meet those targets early.
This evening, the Manchester Evening News carried an announcement that the university of Manchester institute of science and technology is to set up a virtual business school that will bring the country's best brains together under one virtual roof.
I am a regular visitor to the digital world centre at the Lowry centre at Salford Quays—one of the landmark millennium projects. The 50,000 sq ft high-tech building will provide an important showcase for Government IT initiatives. An informative exhibition on the ground floor will be open to the public free of charge. On the first floor, meeting facilities with international high-speed, broad-band connections will be available for SMEs and progressive British companies. The programmes will be directed by the Digital World society—a collaboration of leading global IT companies.
To establish the United Kingdom as a leader in the digital world, we should establish a national centre to house our digital assets, so that they can be accessed from all over the world. That could be achieved via the digital world centre at Salford Quays. The facility will be at the hub of a broad-band network infrastructure that stretches out to schools, libraries, community centres and businesses. The UK can become the leader in a high-speed internet that will deliver full motion video throughout the world.
Of course, I have trumpeted the achievements of my locality. However I am keen to ensure that all the important projects that I described work together to ensure effective delivery of our local, national and global strategies. I continually hear the polarised arguments as to strategies: some commentators claim that local strategies are more important than global ones, and vice versa. We need both local and global strategies—perhaps we should call them "glocal" strategies. What is important is that the strategies meet our objectives to encourage maximum access for all citizens; to promote and encourage research development and implementation; and to facilitate e-commerce with minimum, but appropriate, regulation such as that provided in the Bill.
Without thought-out strategies, local economies may lose out—not just by becoming B-roads off the information superhighway, but by following traditional methods of economic development that ignore new types of activity and alliance, and new modes of learning, emerging networks and communities. Measures to address social exclusion must be central to the e-commerce debate and strategy, as should the role of a broadly defined, non-statutory sector—the so-called third sector. That is why I support organisations such as Communities on Line and Tele Cities.
The progressive use of information, communication and enabling technologies and the internet forces us to develop new ways to work and co-operate together, to promote what


I call "co-opetition": the maximum co-operation between traditionally competing organisations and businesses so that they can work collaboratively towards achieving a common aim or goal—whether that be commercial, social or political.
I am delighted by the Government's bold commitment to make electronically available 25 per cent. of Government services by 2002, increasing to 100 per cent. by 2008. I am sure that other hon. Members have commented on the economic gains to the public sector of e-commerce. In September, an article in the magazine Public Finance reported on research undertaken by the IT consultancy Kable, which estimated that central and local government combined could be saving a staggering £4.1 billion a year within five years, by adopting e-commerce for services that involve financial transactions and by reducing procurement costs. That could be achieved with minimal investment.
The Bill, when implemented, will enable the UK to take its place as the best country in the world for the transaction of e-commerce. It will broaden the access for UK citizens to open up the internet. In this seemingly dry and very unglamorous Bill, we may even be at the start of remodelling our democracy. It will certainly allow us to embrace the future with confidence, commitment and creativity. People first, technology in support. I welcome the Bill.

Mr. Nick Gibb: We may start on a note of agreement. The debate has been excellent, with some high-quality and well informed speeches.
The development of e-commerce is crucial to the country's future wealth and prosperity. If we embrace, encourage and liberate e-commerce, enabling Britain to be seen as a haven for e-commerce entrepreneurs, there is the very real possibility that we shall deliver enormous opportunities for people in this country.
Throughout the debate, we have been told that there are 179 million on-line users, and that that figure is estimated to rise, next year, to 250 million and by 2005 to some 350 million. In cash terms, e-commerce was worth $12 billion in 1999. Its worth will grow to between $350 billion and $500 billion by 2002 and to a staggering $1,000 billion per annum by between 2003 and 2005.
Do we want Britain to be at the forefront of those developments or to be an also-ran? Do we, as a nation, want that prosperity or should we just see how it turns out? It is unfortunate for the future of e-commerce in Britain that, at this crucial time, we have a Labour Government. However new it claims to be, although new Labour speaks the rhetoric of enterprise and a free market and deregulation, using that language in its presentation, the reality is that of traditional Labour—suspicion of business, fear of the free market, and an instinct that is always to regulate.

Several hon. Members: rose—

Mr. Gibb: I give way to the hon. Member for Ellesmere Port and Neston (Mr. Miller).

Mr. Miller: Perhaps the hon. Gentleman will explain why, if there is a huge divide between the Labour party

and business, I was able to quote a long and reasonably impressive list of support from companies such as Dell and Microsoft. My hon. Friend the Member for Eccles (Mr. Stewart) mentioned IBM. Why is their support given to Labour, not the Tory party?

Mr. Gibb: Well, it is given to the Tory party on this issue. Those companies are expressing a sigh of relief that, thanks to the Conservative Opposition, who opposed the initial drafts of the Bill, they now have a Bill that they feel able to support.
We saw the regulatory tendency in the early drafts of the Bill. It is the Conservatives who really understand how entrepreneurs work and enterprise flourishes. It was the Conservatives—

Mr. White: Will the hon. Gentleman give way?

Mr. Gibb: Let me carry on; I shall give way to the hon. Gentleman later.
It is the Conservatives who understand enterprise, and it was Conservative shadow Ministers who insisted on the changes to the draft Bills that took out all the restrictions and burdens that would have killed a flourishing e-commerce sector stone dead.
In her press release, the Minister for Small Business and E-Commerce says:
This historic Bill will help make the UK the best place in the world to do electronic business. Britain led the world in the first industrial revolution. Now we are determined to be winners in the new knowledge economy revolution.
Britain succeeded in the industrial revolution, however, precisely because we had a laissez-faire economy by the international standards of the time. If the Government had wanted an industrial revolution in e-commerce, they should not have put in place the whole paraphernalia of state control that could come into effect under part I.

Mr. Miller: Does the hon. Gentleman not recall that the hon. Member for Esher and Walton (Mr. Taylor), pointed out in his interesting contribution that the policy for mandatory key escrow came from the Conservative party?

Mr. Gibb: Yes, and during the consultation that was begun by my hon. Friend the Member for Esher and Walton, we would have come to the conclusions that we have come to today. What is wrong with the Government is that, even after consultation, they publish Bills containing such paraphernalia. This Bill still allows for the possibility of huge state regulation.
The Government's own consultation exercise revealed deep unease in industry about these provisions. They create enormous uncertainties, so industry has called for them to be dropped altogether. Perhaps the Minister for Competitiveness could add some certainty to the issue by answering the question that the Minister for Small Business and E-Commerce failed to answer properly in response to the speech by my hon. Friend the Member for Rutland and Melton (Mr. Duncan).
Paragraph 76 of the explanatory notes states:
The Government will commence Part I and set up the statutory scheme, only if self-regulation does not work.


The Minister has 20 minutes to reply, so will he tell us how the Government will judge whether self-regulation does or does not work? What will the criteria be? Part I contains clauses 1 to 9, which make up 60 per cent. of the Bill. Whether part I comes into effect will depend on the answer to those questions.
The Secretary of State can implement the new regulatory regime without even a debate in the House. It can be done without any parliamentary approval whatever. That is surprising given the Government's expressed view that they always take on board Select Committee recommendations. In its report on the draft Bill, the Select Committee on Trade and Industry said:
We are particularly concerned at the proposal that the order necessary to bring in part I of the Bill … should not be subject to any parliamentary procedure. We recommend that … Parliament should have the opportunity to debate and vote on the issue.
Why will there be no vote?
Will the Minister explain what is meant in clause 15 by an
order made by statutory instrument"?
Will that statutory instrument be introduced according to the negative or affirmative resolution procedure, or will it be one that can be implemented solely by order?
In her press release, the Minister for Small Business and E-Commerce said:
We are determined to get e-commerce law right and get it in fast. That is why we are introducing this Bill in the same week as the Queen's Speech.
This Bill was introduced in last year's Queen's Speech, but it was not ready a year after that speech. Consequently, we have lost a year in the battle to make Britain a world haven for e-commerce. This Government, not the last one, are to blame for that.
One of the Government's defining features is their fear of confronting issues. That is why in almost all their Bills the meat of the legislation is not in the Bill, but in secondary legislation. Rarely, if ever, is that secondary legislation available before Second Reading. This 15-clause Bill contains regulatory powers in clause 2, which sets out the accreditation criteria, in clause 3, which is on the delegation of functions to an appointed individual, in clauses 5 and 8, which contain a host of regulatory powers to amend primary legislation, and in clause 10. Where are those regulations and why have the Government not published them in time for Second Reading? Will the Minister undertake that, apart from the host of regulations under clause 8, all the other regulations in the Bill will be ready by the time of the Committee stage?
We have had an interesting debate. The hon. Member for Ellesmere Port and Neston pointed out that no one in the House really knows the extent of the internet's growth. He called it an asymptotic curve. He went on to say that all good trade works on the basis of trust, and of course he is right, but that is why it is not necessary to establish this hugely cumbersome statutory framework.

Mr. Ian Stewart: Will the hon. Gentleman give way?

Mr. Gibb: No, because I am running out of time.
My hon. Friend the Member for Esher and Walton made an excellent, informed speech. I now know why his initials and his nickname are IT. He pointed out how long

it has taken the Bill to gestate and said that it had made elephantine progress. He pointed out, with his usual insight, that Janet Street-Porter, who forecast no future for the internet, cannot count foresight among her many other undoubted qualities. My hon. Friend is right to point out that the uncertainty about whether internet service providers are mere carriers or are responsible for the content of the message is critical.
My hon. Friend gave us some EU intelligence from his friends at Directorate-General XV, which was very interesting, partly because we found out that he has friends at DG XV. He also urged the Government to show leadership and aim at higher targets than 50 per cent. of procurement by 2005. Why have the Government exempted Customs and Excise and the Revenue from the storage provisions in clause 8? Tax returns can be submitted by e-mail, but why cannot the measures in the Bill apply to record-keeping and deal with the requirement to keep books and records for six years?
The hon. Member for Milton Keynes, North-East (Mr. White) was right to point out the need for continual consultation on these issues. There may be many companies in the IT sector today which did not even exist when the consultation process took place in March. That was also the view of the Select Committee on Trade and Industry.
The hon. Gentleman also raised the important point about the fees that the statutory regulatory body can charge. There is nothing in the Bill that limits the level of those charges, and without such limits there is a risk that fees will become a form of taxation—or, as my hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley) called it, stealth taxation—which has not been approved annually by the House.
My hon. Friend the Member for Bury St. Edmunds demanded a timetable for amending the legislation for other Departments, as provided for in clause 8. It is a pity that none of those regulations has been published at the time of the Second Reading debate. He pointed out, in an excellent speech, that it has taken two and a half years for the Government to introduce the Bill. He agreed with many hon. Members and the Law Society that part I is unnecessary. Like many other hon. Members, he alerted the House to the murky fee issue.

Dr. Ladyman: rose—

Mr. Gibb: I shall not give way because I want to finish in a couple of minutes.
Ministers must give the House some indication of what the level of fees will be. Will the Minister agree to a cap on those fees? Will he answer those questions today or in Committee?
My hon. Friend the Member for Bury St. Edmunds is right to demand a timetable for the publication of the whole raft of regulations demanded by the Bill, and those regulations should be published soon. Finally, he alerted the House to the danger of differential fees for those who struggle with IT or who need a course such as "computing for the terrified", which my hon. Friend the Member for Banbury (Mr. Baldry) said is available in his constituency.
My hon. Friend the Member for Banbury is the only member of the Select Committee who is present today—the others are in Sweden. He raised a number of important questions, including the implementation dates for the


various elements of the Bill. He expressed concern about the e-envoy or tsar, a post which seems to be turning into a virtual appointment.
Turning to the speech by the hon. Member for Weston-super-Mare (Mr. Cotter), I must say that I am delighted that Liberal Democrat Front-Bench Members agree with us that part I is unnecessary and should be deleted from the Bill. I hope to see Liberal Members in the Lobby with us this evening.
The hon. Member for Stevenage (Barbara Follett) complained that e-mail is not being used by as many businesses in the eastern region as in London. She gave the figures of 57 per cent. of firms and 81 per cent. of firms respectively. If she knew her constituency businesses better, she would find that the e-mail usage in Stevenage is almost as high as in London.
The hon. Member for Sittingbourne and Sheppey (Mr. Wyatt), in a Clicksure contribution, agreed with my hon. Friend the Member for Banbury and others that part III is a bolt-on and needs wider consultation. The hon. Gentleman gave an interesting demonstration of the latest mobile phone technology, but he fails to understand that trust on the internet is better achieved by voluntary regulation than by heavy-handed legislation.
The hon. Member for South Thanet (Dr. Ladyman) spoke of the law being behind the times in respect of computer technology, but in the same breath said that he was one of the few Members of Parliament who is seriously worried about the prospect of self-regulation. In a powerful speech, my hon. Friend the Member for Guildford (Mr. St. Aubyn) pointed out that it was the ending of exchange controls in 1979 that liberated the City of London and enabled it to become the financial centre of Europe. A similarly deregulated approach, rather than the over-regulated approach set out in part I, is what is needed if Britain is to become the e-commerce centre of Europe.
The Government have missed an opportunity to create a light-touch legal regime that would have made this country a world leader in e-commerce enterprise. The Bill is late and it is flawed. The Conservatives have successfully forced the Government to remove part III of the draft Bill. We will now have to work hard in Committee to remove part I and limit the Government's regulating instinct.
If we are successful and the Government accept our amendments, we have every chance of making Britain a world leader in the e-commerce sector. The Conservative approach demonstrates our understanding of the modern world of e-commerce and global competition. For the sake of the industry, I hope that the Government will accept our amendments in Committee.

The Minister for Competitiveness (Mr. Alan Johnson): I agree with the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) that this has been a fascinating debate. Listening to it has been a humbling experience. A friend told me that replying to the debate would be as easy as falling off an analogue, but it is not, mainly because of the expertise and knowledge displayed by hon. Members on both sides of the House—albeit mostly Labour Members, I am happy to say.
Before I reply to as many of the detailed points raised as I can, I shall remind the House of the remarks made by my hon. Friend the Minister for Small Business and E-Commerce. The Bill, appropriately introduced in the last Parliament of the millennium, is central to the modernising theme of the Government's legislative programme. Modernising the law to ensure that our economy prospers in the information revolution is a huge task, but one to which we are committed. We are equally determined to create a modern Britain for the new millennium; that involves modernising government itself. In short, we are determined to create a legal and a business environment to make the UK the best place in the world to conduct electronic business.
The speeches of Opposition Members carried us into the virtual reality—indeed, the parallel universe—they occupy. At the fag-end of their 18 years in government, the Conservatives issued a consultation document that proposed mandatory key escrow and a mandatory regulation scheme; yet, today, they attempt to delay the legislation by tabling an amendment in which they suggest that the Government are over-regulating the industry.
In a thoughtful speech, my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) referred to problems in respect of electronic signatures, as did the spokesman for the Liberal Democrats, the hon. Member for Weston-super-Mare (Mr. Cotter). Incidentally, the Liberal Democrats are sitting on a virtual fence, waiting for the Government reply before deciding which way to vote. I assure both hon. Members that the Bill does not include any presumption as to whether or not a particular electronic signature is valid. It does not change the balance of proof between the consumer and suppliers: the courts will decide on the effects of a signature based on the evidence before them, just as they do today in respect of normal signatures.
The Opposition's virtual reality was momentarily illuminated by the speech of the hon. Member for Esher and Walton (Mr. Taylor), who is one of those who has a profound knowledge of the subject. The hon. Gentleman was kind enough to send me a note telling me that he was unable to be present for the winding-up speeches. He was extremely supportive of the Bill—indeed, he recanted the provisions of the document issued by the previous Conservative Government. However, in response to the points he raised, I repeat the assurance that we shall not insist on key escrow—indeed, clause 13 specifically prevents that. Orders are made under clause 8 to allow electronic communication where existing laws require paper. If providers want to offer key escrow services and people want to use them, that is entirely up to them; the Government do not intend to interfere.
The hon. Member for Esher and Walton referred to independent service providers' concerns that they may be held liable for material transmitted where they have neither knowledge of its illegality nor control over its transmission. He supports the need for legal certainty. The draft EU electronic commerce directive prohibits member states from imposing a general obligation on independent service providers to monitor the information that they transmit or store and proposes exemptions from liability for illegal content for intermediaries although it does not prevent the imposition of monitoring requirements in specific cases. We shall continue to work hard with the


industry to ensure that the general issue of liability is got right in the European Union electronic commerce directive.
My hon. Friend the Member for Milton Keynes, North-East (Mr. White) referred to credit cards in another thoughtful speech. We recognise the difficulties experienced by small companies in obtaining merchant status for handling credit card transactions on-line. It is a significant barrier to the widespread adoption of e-commerce. Together with Treasury colleagues, my hon. Friend the Minister for Small Business and E-Commerce is working with Don Cruickshank's banking review to find a solution to this problem.
My hon. Friend the Member for Milton Keynes, North-East referred, as did many other hon. Members, to the cost of self-regulation and consultation. I assure my hon. Friend that fees under a statutory scheme or under the self-regulation scheme will be based on the cost of assessment and the scale of operation. This will ensure that smaller companies will not be penalised. I also give the assurance that there will be on-going dialogue between the scheme and the Government. The proposals that I have seen include a Government representative on the executive board.
The hon. Member for Banbury (Mr. Baldry) made a fascinating contribution to the debate. He was released from having to tour Sweden with the rest of the members of the Select Committee on Trade and Industry. I thought that he had gone off to Stockholm but I see him in his place. He is a Conservative Member who has some knowledge of the fundamental issues. The hon. Gentleman drew our attention to the unanimous recommendation of the Select Committee. Given that the Opposition are saying that part I is entirely unnecessary, I remind the House that the Select Committee said that it acknowledged the need for some sort of accreditation scheme for trust service providers to persuade potential users of electronic commerce that it was as safe and reliable as traditional forms of commerce but questioned whether such a scheme needed to be statutory. It recommended that the Government take powers to establish a statutory-backed scheme but hold them in reserve unused unless and until it was demonstrated that a voluntary scheme had failed to protect the interests of all consumers and service providers.

Mr. Duncan: The Minister has been asked on about five occasions what the criteria will be by which he will judge whether a statutory scheme is necessary: what are they?

Mr. Johnson: Hold steady.
The hon. Member for Banbury drew our attention to the Select Committee's recommendation, and it relates specifically to what we are doing today. We listened to the Committee and we are implementing its recommendations. The hon. Gentleman talked about the timing of bringing clause 7 into force. As he will know, it is normal to leave at least two months after Royal Assent before making a commencement order. We intend that there will be no further delay beyond that.

Mr. Duncan: What are the criteria?

Mr. Johnson: When I come to the criteria, I am sure that the hon. Gentleman will be extremely satisfied with my response.
The hon. Member for Banbury referred to the significant minority procedure and the mechanism for making deregulatory licence modifications as laid out in part III. As stated by my hon. Friend the Minister for Small Business and E-Commerce in her opening speech, the Government will bring forward amendments so that the significant minority procedure can be dropped from the Bill. The remaining deregulatory mechanism would allow fast-track licence modifications to remove regulatory burdens only if stringent tests were met.
The hon. Gentleman also raised a point about the e-envoy, a point which was also raised by the hon. Member for Bognor Regis and Littlehampton. I assure hon. Members that Alex Allen is not a virtual appointment. He was appointed by my right hon. Friend the Prime Minister in September. Although he is still in Australia he is already spending time on e-business issues. He will pick up the reins full-time in January and among other duties will be responsible for implementing the recommendations in the PIU—performance and innovation unit—report on electronic commerce.
My hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) raised the matter of international activity. We are supporting activity through the EU, the Organisation for Economic Co-operation and Development and the United Nations to develop common standards, but if we wait for such standards to be finalised, we will be the last to benefit. We want to lead, and we believe that self-regulation offers a flexible way of doing that.
In a fascinating contribution with props provided, my hon. Friend also asked about voice signature. I can reassure him that voice signature is indeed an electronic signature, within the terms of our Bill.
The hon. Member for Bury St. Edmunds (Mr. Ruffley) referred to ideas for carve-out—another example of terminology—which would permit the electronic alternative to paper to be introduced across the board, with some exceptions. As it stands, the Bill adopts a case-by-case approach, but we are already studying the hon. Gentleman's idea and we expect to have more to say about it in Committee.
Clause 8 does provide the power to charge different fees for electronic and paper transactions, and there is no question of the Government pocketing the savings, but we will need to consider the position of the socially excluded. The Bill is flexible and Ministers may view their areas of responsibility differently. No doubt we will return to the point in Committee.
While I have time, let me draw attention to the criteria being set for regulation. [HON. MEMBERS: "Aha!] This should be no surprise to Opposition Members. We published a detailed set of criteria in July. Do they not read such documents? It was mentioned by my hon. Friend the Minister for Small Business and E-Commerce when she introduced the debate.
The document states:
The Government believes any scheme should have the following characteristics:
The scheme should be wide enough to cover a broad range of services including signature and confidentiality services.
The scheme should be demonstrably rigorous, impartial and trusted by all sectors of industry … It should not act as a barrier to new entrants to the market"—


that was one of the suggestions that we heard from the Opposition—
The scheme should have a means of taking into account the views of consumers.
The scheme needs effective mechanisms for ensuring compliance with these standards"—
including a number of examples set out in the report. Finally:
The scheme should take account of the draft EU Electronic Signatures Directive … In particular, it should provide UK providers with a means of showing that their signature service meets the standards envisaged in the draft directive".
Those criteria have been published, they are clear to the industry and they have been repeated for the benefit of the Opposition.
I do not have time to refer in detail to all the other contributions, but they were fascinating. In a shameless bid for a place on the Committee, my hon. Friend the Member for South Thanet (Dr. Ladyman) made one of the most thoughtful contributions. He described his experience of working in the industry over a number of years, and I am sure that we all benefited from hearing his comments. He pointed out that the wording of clause 7 is technologically neutral, which ensures that developments in new technology will not affect the provisions of the Bill.
My hon. Friend the Member for Stevenage (Barbara Follett) pointed out what a godsend the internet is to women who have family responsibilities and work unsocial hours, especially at this time of the year. In another thoughtful contribution, my hon. Friend the Member for Broxtowe (Dr. Palmer) welcomed the Bill. He was enthusiastic about part II and recognised the need for reserve powers in part I. My hon. Friend the Member for South Derbyshire (Mr. Todd) supported the Bill, and commended the extensive consultation and the changes that we made to the Bill as a result of that.
Those are all Members whose knowledge of these matters far exceeds mine. They contributed to an immensely informed debate.
The hon. Member for Bognor Regis and Littlehampton asked about the procedure for a commencement order under part I. There is no provision in the Bill for alternative or negative procedure for the commencement order. That is in accordance with normal procedure for such statutory instruments.

Mr. Gibb: rose—

Mr. Johnson: I do not have time to give way.
The situation in respect of the Inland Revenue and Customs and Excise will be dealt with under the Finance Act 1999, not under the Bill.

Several hon. Members: rose—

Mr. Johnson: I am not giving way. We hope that part I will not be brought into force, so there is no need to present draft statutory instruments yet. We shall report on progress on self-regulation. Clause 8 orders have to cover many Acts and we intend to propose some alternative structure.

Mr. Duncan: rose—

Mr. Johnson: I will not give way.
I do not need to emphasise the importance of our proposals; hon. Members have done that during the debate. There may be differences in our views, but we all agree that trust and confidence are essential. Therefore, it is bizarre that the Opposition amendment tries to prevent the establishment of that trust. The industry would not develop a self-regulatory scheme for trust service providers if it believed that that would damage its prospects.

Mr. Duncan: rose—

Mr. Johnson: I am not giving way. We are adopting the unanimous recommendation of the Select Committee on Trade and Industry and the hon. Member for Esher and Walton—I am pleased that he has resumed his seat—recanted on Opposition proposals. I shall remind the House of the industry's views. Microsoft says that the publication of the Bill
provides a model for the rest of Europe to follow.
Keith Chapple, the managing director of Intel UK, said:
We are delighted that government has confirmed in the Bill that key-escrow is off the agenda and is focusing on the real issue of legal recognition of electronic signatures".
Carl Symon, chief executive officer of IBM said:
IBM welcomes the introduction of this important measure and hopes that it will become law very early in the new Millennium.
Keith Todd, the chief executive of ICL plc said:
This is good news … This new sense of partnership between industry and Government"—
he refers specifically to part I—
will make the UK a great place for electronic commerce.
The list continues with Cisco Systems, AOL and BT, which said:
BT supports the government aim of creating an environment of trust and confidence in UK e-commerce. Legal recognition of digital signatures and writing on a non-discriminative basis, is an important step in this procedure.

Mrs. Angela Browning: We have received conflicting advice on clause 15. The Minister said that there would be no statutory instrument whereas his colleague said that a statutory instrument would be introduced. Will the Minister clarify that?

Mr. Johnson: I said that we would follow the usual procedure, but we cannot say now whether the negative or the positive resolution procedure will be used.
Today's debate will not be the last in which we discuss electronic issues. We all agree about the importance of the electronic revolution and our need to embrace it. It touches all our lives. Indeed, many schoolchildren are probably more adept than us at dealing with the technologies and thus better placed than politicians to discuss their potential.
The Bill could be the first measure to become law in the 21st century. Although it will not transform our lives overnight, it makes an important start on the transformation that will happen in the future and I commend it to the House.

Mr. Gibb: By leave of the House—

Hon. Members: No.

Question put, That the amendment be made:—

The House divided: Ayes 128, Noes 319.

Division No. 5]
[9.59 pm


AYES


Ainsworth, Peter (E Surrey)
Lloyd, Rt Hon Sir Peter (Fareham)


Ancram, Rt Hon Michael
Llwyd, Elfyn


Arbuthnot, Rt Hon James
Loughton, Tim


Atkinson, Peter (Hexham)
Luff, Peter


Baldry, Tony
Lyell, Rt Hon Sir Nicholas


Bercow, John
McIntosh, Miss Anne


Beresford, Sir Paul
MacKay, Rt Hon Andrew


Blunt, Crispin
Maclean, Rt Hon David


Body, Sir Richard
McLoughlin, Patrick


Boswell, Tim
Madel, Sir David


Bottomley, Peter (Worthing W)
Malins, Humfrey


Bottomley, Rt Hon Mrs Virginia
Maples, John


Brady, Graham
Mates, Michael


Brazier, Julian
Maude, Rt Hon Francis


Browning, Mrs Angela
Mawhinney, Rt Hon Sir Brian


Butterfill, John
May, Mrs Theresa


Cash, William
Moss, Malcolm


Clappison, James
Nicholls, Patrick


Clark, Dr Michael (Rayleigh)
O'Brien, Stephen (Eddisbury)


Collins, Tim
Ottaway, Richard


Cormack, Sir Patrick
Page, Richard


Cran, James
Paice, James


Davies, Quentin (Grantham)
Paterson, Owen


Davis, Rt Hon David (Haltemprice & Howden)
Pickles, Eric



Prior, David


Day, Stephen
Redwood, Rt Hon John


Duncan, Alan
Robathan, Andrew


Duncan Smith, lain
Robertson, Laurence


Emery, Rt Hon Sir Peter
Roe, Mrs Marion (Broxbourne)


Evants, Nigel



Faber, David
Rowe, Andrew (Faversham)


Fabricant, Michael
Ruffley, David


Fallon, Michael
St Aubyn, Nick


Flight, Howard
Sayeed, Jonathan


Forth, Rt Hon Eric
Shephard, Rt Hon Mrs Gillian


Fowler, Rt Hon Sir Norman
Shepherd, Richard


Fox, Dr Liam
Simpson, Keith (Mid-Norfolk)


Fraser, Christopher

Spelman, Mrs Caroline


Garnier, Edward
Spicer, Sir Michael


Gibb, Nick
Spring, Richard


Gill, Christopher
Stanley, Rt Hon Sir John


Gillan, Mrs Cheryl
Steen, Anthony


Gorman, Mrs Teresa
Streeter, Gary


Gray, James
Swayne, Desmond


Green, Damian
Tapsell, Sir Peter


Greenway, John
Taylor, Ian (Esher & Walton)


Grieve, Dominic
Taylor, John M (Solihull)


Hamilton, Rt Hon Sir Archie
Taylor, Sir Teddy


Hammond, Philip
Tredinnick, David


Hawkins, Nick
Tyrie, Andrew


Heathcoat—Amory, Rt Hon David
Viggers, Peter


Horam, John
Walter, Robert


Howard, Rt Hon Michael
Wardle, Charles


Hunter, Andrew
Waterson, Nigel


Jack, Rt Hon Michael
Wells, Bowen


Jackson, Robert (Wantage)
Whitney, Sir Raymond


Jenkin, Bernard
Whittingdale, John


Key, Robert
Wilkinson, John


King, Rt Hon Tom (Bridgwater)
Winterton, Mrs Ann (Congleton)


Kirkbride, Miss Julie
Winterton, Nicholas (Macclesfield)


Laing, Mrs Eleanor
Woodward, Shaun


Lait, Mrs Jacqui
Yeo, Tim


Lansley, Andrew



Leigh, Edward
Tellers for the Ayes:


Letwin, Oliver
Mr. Geoffrey Clifton-Brown


Lewis, Dr Julian (New Forest E)
and


Lidington, David
Mr. Oliver Heald.





NOES


Abbott, Ms Diane
Cunningham, Jim (Cov'try S)


Ainger, Nick
Darting, Rt Hon Alistair


Ainsworth, Robert (Cov'try NE)
Darvill, Keith


Alexander, Douglas
Davey, Valerie (Bristol W)


Allan, Richard
Davidson, Ian


Allen, Graham
Davies, Rt Hon Denzil (Llanelli)


Anderson, Donald (Swansea E)
Davies, Geraint (Croydon C)



Anderson, Janet (Rossendale)
Dawson, Hilton


Armstrong, Rt Hon Ms Hilary
Dean, Mrs Janet


Ashton, Joe
Denham, John


Atherton, Ms Candy
Dismore, Andrew


Atkins, Charlotte
Donohoe, Brian H


Austin, John
Doran, Frank


Baker, Norman
Dowd, Jim


Ballard, Jackie
Drew, David


Banks, Tony
Dunwoody, Mrs Gwyneth


Barnes, Harry
Eagle, Angela (Wallasey)


Battle, John
Eagle, Maria (L'pool Garston)



Bayley, Hugh
Edwards, Huw


Beard, Nigel
Efford, Clive


Beckett, Rt Hon Mrs Margaret
Ellman, Mrs Louise


Bell, Stuart (Middlesbrough)
Ennis, Jeff


Benn, Hilary (Leeds C)
Fearn, Ronnie


Bennett, Andrew F
Field, Rt Hon Frank


Benton, Joe
Fisher, Mark


Bermingham, Gerald
Fitzpatrick, Jim


Betts, Clive
Fitzsimons, Lorna


Blackman, Liz
Flint, Caroline


Blears, Ms Hazel
Follett, Barbara


Blizzard, Bob
Foster, Rt Hon Derek


Boateng, Rt Hon Paul
Foster, Michael Jabez (Hastings)


Borrow, David
Foster, Michael J (Worcester)


Bradley, Keith (Withington)
Galloway, George


Bradshaw, Ben
Gapes, Mike


Brinton, Mrs Helen
Gardiner, Barry


Brown, Russell (Dumfries)
Gerrard, Neil


Browne, Desmond
Gibson, Dr Ian


Burden, Richard
Gilroy, Mrs Linda


Butler, Mrs Christine
Godsiff, Roger


Cable, Dr Vincent
Goggins, Paul


Campbell, Alan (Tynemouth)
Golding, Mrs Llin


Campbell, Mrs Anne (C'bridge)
Gordon, Mrs Eileen


Campbell, Ronnie (Blyth V)
Griffiths, Jane (Reading E)


Campbell—Savours, Dale
Griffiths, Win (Bridgend)


Cann, Jamie
Grocott, Bruce


Casale, Roger
Grogan, John


Caton, Martin
Hain, Peter


Cawsey, Ian
Hall, Mike (Weaver Vale)


Chapman, Ben (Wirral S)
Hall, Patrick (Bedford)


Chidgey, David
Hamilton, Fabian (Leeds NE)


Clapham, Michael
Hanson, David


Clark, Rt Hon Dr David (S Shields)
Harman, Rt Hon Ms Harriet


Clark, Dr Lynda (Edinburgh Pentlands)
Harvey, Nick



Heal, Mrs Sylvia


Clarke, Charles (Norwich S)
Healey, John


Clarke, Eric (Midlothian)
Heath, David (Somerton & Frome)


Clarke, Rt Hon Tom (Coatbridge)
Henderson, Doug (Newcastle N)


Clarke, Tony (Northampton S)
Henderson, Ivan (Harwich)


Clelland, David
Hepburn, Stephen


Clwyd, Ann
Heppell, John


Coaker, Vernon
Hesford, Stephen


Coffey, Ms Ann
Hewitt, Ms Patricia


Cohen, Harry
Hill, Keith


Coleman, Iain
Hodge, Ms Margaret


Connarty, Michael
Hope, Phil


Cook, Frank (Stockton N)
Hopkins, Kelvin


Corbyn, Jeremy
Howarth, Alan (Newport E)


Corston, Jean
Howarth, George (Knowsley N)


Cousins, Jim
Howells, Dr Kim


Cranston, Ross
Hoyle, Lindsay


Crausby, David
Hughes, Ms Beveriey (Stretford)


Cryer, John (Hornhurch)
Hughes, Simon (Southwark N)


Cummings, John
Humble, Mrs Joan


Cunningham, Rt Hon Dr Jack (Copeland)
Hurst, Alan



Hutton, John






Iddon, Dr Brian
Pendry, Tom


Illsley, Eric
Pickthall, Colin


Jackson, Helen (Hillsborough)
Pike, Peter L


Jenkins, Brian
Plaskitt, James


Johnson, Alan (Hull W & Hessle)
Pollard, Kerry


Johnson, Miss Melanie (Welwyn Hatfield)
Pond, Chris



Pope, Greg


Jones, Rt Hon Barry (Alyn)
Powell, Sir Raymond


Jones, Helen (Warrington N)
Prentice, Ms Bridget (Lewisham E)


Jones, Jon Owen (Cardiff C)
Prentice, Gordon (Pendle)


Jones, Martyn (Clwyd S)
Purchase, Ken


Kaufman, Rt Hon Gerald
Quin, Rt Hon Ms Joyce


Keeble, Ms Sally
Quinn, Lawrie


Keen, Alan (Feltham & Heston)
Radice, Rt Hon Giles


Kelly, Ms Ruth
Rammell, Bill


Kemp, Fraser
Reed, Andrew (Loughborough)


Kennedy, Jane (Wavertree)
Rendel, David


Khabra, Piara S
Roche, Mrs Barbara


Kidney, David
Rogers, Allan


Kilfoyle, Peter
Rooker, Jeff


King, Andy (Rugby & Kenilworth)
Rooney, Terry


King, Ms Oona (Bethnal Green)
Ross, Ernie (Dundee W)


Kirkwood, Archy
Rowlands, Ted


Kumar, Dr Ashok
Roy, Frank


Ladyman, Dr Stephen
Ruane, Chris


Lawrence, Mrs Jackie
Ruddock, Joan


Lepper, David
Russell, Bob (Colchester)


Leslie, Christopher
Salmond, Alex


Levitt, Tom
Salter, Martin


Lewis, Ivan (Bury S)
Sanders, Adrian


Lewis, Terry (Worsley)
Sarwar, Mohammad


Liddell, Rt Hon Mrs Helen
Savidge, Malcolm


Linton, Martin
Sawford, Phil


Livingstone, Ken
Sedgemore, Brian


Lloyd, Tony (Manchester C)
Shaw, Jonathan


Love, Andrew
Sheerman, Barry


McAvoy, Thomas
Sheldon, Rt Hon Robert


McCartney, Rt Hon Ian (Makerfield)
Simpson, Alan (Nottingham S)



Singh, Marsha


Macdonald, Calum
Smith, Rt Hon Andrew (Oxford E)


McDonnell, John
Smith, Angela (Basildon)


McKenna, Mrs Rosemary
Smith, Jacqui (Redditch)


Mackinlay, Andrew
Smith, John (Glamorgan)


McNulty, Tony
Smith, Llew (Blaenau Gwent)



McWilliam, John
Smith, Sir Robert (W Ab'd'ns)


Mahon, Mrs Alice
Snape, Peter


Mallaber, Judy
Soley, Clive


Marsden, Gordon (Blackpool S)
Spellar, John


Marsden, Paul (Shrewsbury)
Squire, Ms Rachel


Marshall, David (Shettleston)
Starkey, Dr Phyllis


Marshall-Andrews, Robert
Steinberg, Gerry


Martlew, Eric
Stevenson, George


Meale, Alan
Stewart, David (Inverness E)


Merron, Gillian
Stewart, Ian (Eccles)



Michie, Bill (Shef'ld Heeley)
Stinchcombe, Paul


Milburn, Rt Hon Alan
Strang, Rt Hon Dr Gavin


Miller, Andrew
Straw, Rt Hon Jack


Mitchell, Austin
Stringer, Graham


Moonie, Dr Lewis
Stuart, Ms Gisela


Morgan, Ms Julie (Cardiff N)
Stunell, Andrew


Morley, Elliot
Sutcliffe, Gerry



Morris, Rt Hon Ms Estelle (B'ham Yardley)
Taylor, Rt Hon Mrs Ann (Dewsbury)


Mountford, Kali
Taylor, Ms Dari (Stockton S)


Mullin, Chris
Temple-Morris, Peter


Murphy, Denis (Wansbeck)
Timms, Stephen


Murphy, Jim (Eastwood)
Tipping, Paddy


Murphy, Rt Hon Paul (Torfaen)
Todd, Mark


Naysmith, Dr Doug
Touhig, Don


O'Brien, Bill (Normanton)
Trickett, Jon


O'Brien, Mike (N Warks)
Truswell, Paul


Olner, Bill
Turner, Dennis (Wolverh'ton SE)


Organ, Mrs Diana
Turner, Dr Desmond (Kemptown)


Osborne, Ms Sandra
Turner, Dr George (NW Norfolk)


Palmer, Dr Nick
Turner, Neil (Wigan)


Pearson, Ian
Twigg, Derek (Halton)





Twigg, Stephen (Enfield)
Willis, Phil


Tynan, Bill
Wills, Michael


Walley, Ms Joan
Winnick, David


Ward, Ms Claire
Winterton, Ms Rosie (Doncaster C)


Wareing, Robert N
Wood, Mike


Watts, David
Woolas, Phil



Worthington, Tony


Webb, Steve
Wright, Anthony D (Gt Yarmouth)


Welsh, Andrew
Wright, Dr Tony (Cannock)


White, Brian
Wyatt Derek


Whitehead, Dr Alan



Wicks, Malcolm
Tellers for the Noes:


Williams, Alan W (E Carmarthen)
Mr. Kevin Hughes and


Williams, Mrs Betty (Conwy)
Mr. David Jamieson.

Question accordingly negatived.

Main Question put forthwith, pursuant to Standing Order No. 62 (Amendment on Second or Third Reading), and agreed to.

Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).

ELECTRONIC COMMUNICATIONS BILL [MONEY]

Queen's recommendation having been signified—

Motion made, and Question put forthwith, pursuant to Standing Order No. 52(1)(a),
That, for the purposes of any Act resulting from the Electronic Communications Bill, it is expedient to authorise—

(1) the payment out of money provided by Parliament of—

(a) any expenditure incurred by the Secretary of State for or in connection with the carrying out of his functions under the Act; and
(b) any increase attributable to the Act in the sums so payable out of money so provided under any other Act; and

(2) the payment of sums into the Consolidated Fund.—[Mr. Pope.]

Question agreed to.

ESTIMATES

Motion made, and Question put forthwith, pursuant to Standing Order No. 145(2)(Liaison Committee),

That this House agreed with the Report [23rd November] of the Liaison Committee.—[Mr. Pope.]

Question agreed to.

ADJOURNMENT (CHRISTMAS)

Motion made, and Question put forthwith, pursuant to Standing Order No. 25 (Periodic adjournments),
That this House, at its rising on Tuesday 21st December, do adjourn till Monday 10th January 2000.—[Mr. Pope.]

Question agreed to.

BUSINESS OF THE HOUSE

Ordered,
That, at the sitting on Tuesday, 21st December, the Speaker shall not adjourn the House until she have notified the Royal Assent to Acts agreed upon by both Houses.—[Mr. Pope.]

COMMITTEE OF PUBLIC ACCOUNTS

Ordered,
That Maria Eagle be discharged from the Committee of Public Accounts and Mr. Nigel Griffiths and Mr. Jim Murphy be added to the Committee.—[Mr. Pope.]

DELEGATED LEGISLATION

Madam Speaker: With permission, I shall put together the motions relating to delegated legislation.
Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

DENTISTS

That the draft Dental Auxiliaries (Amendment) Regulations 1999, which were laid before this House on 2nd November, in the last Session of Parliament, be approved.

JUSTICES OF THE PEACE

That the draft Maximum Number of Stipendiary Magistrates Order 1999, which was laid before this House on 3rd November, in the last Session of Parliament, be approved.—[Mr. Pope.]

Question agreed to.

EUROPEAN COMMUNITY DOCUMENTS

Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9) (European Standing Committees),

TAXATION AND FINANCIAL SERVICES

That this House takes note of European Union Documents Nos. 8484/1/99, the second progress report from the ECOFIN Council to the European Council on reinforced tax policy co-operation, 6615/98, a draft Directive on a common system of taxation applicable to interest and royalty payments, 8781/98, and draft Directive to ensure a minimum of effective taxation of savings income within the Community, and 8329/99, a Commission Communication on the action plan for implementing the framework for financial markets; supports the Government's objective of amending the draft Savings Directive to ensure the competitiveness of EU financial markets, including the City of London, are not damaged, through securing among other things an exemption for

eurobonds and other similar instruments; and welcomes the Commission's efforts to develop further the single market in financial services. —[Mr. Pope.]

Question agreed to.

COMMITTEES

Madam Speaker: With permission, I shall put together the motions relating to Committees.

Ordered,

AGRICULTURE

That Mr. Richard Livsey, be discharged from the Agriculture Committee and Mr. Lembit Öpik be added to the Committee.

CATERING

That Rosemary McKenna be discharged from the Catering Committee and Mr. Gerald Bermingham be added to the Committee.

DEFENCE

That Mr. John McWilliam be discharged from the Defence Committee and Mr. Mike Gapes be added to the Committee.

EDUCATION AND EMPLOYMENT

That Yvette Cooper, Mr. John Healey, Mrs. Eleanor Laing and Mr. Malcolm Wicks be discharged from the Education and Employment Committee and Mr. Michael Foster (Worcester), Mr. Stephen O'Brien, Mr. Ian Pearson and Mr. Barry Sheerman be added to the Committee.

HEALTH

That Julia Drown be discharged from the Health Committee and Mrs. Eileen Gordon be added to the Committee.

SCOTTISH AFFAIRS

That Mr. John McAllion, Ms Sandra Osborne and Mr. David Stewart be discharged from the Scottish Affairs Committee and Mr. Russell Brown, Mr. Mohammed Sarwar and Mr. Bill Tynan be added to the Committee.

SOCIAL SECURITY

That Kali Mountford, Mr. Chris Pond and Ms Debra Shipley be discharged from the Social Security Committee and Mr. Andy King and Mr. Gareth Thomas (Clwyd West) be added to the Committee.

TREASURY

That Jacqui Smith be discharged from the Treasury Committee and Mr. James Plaskitt be added to the Committee.—[Mr. John McWilliam, on behalf of the Committee of Selection.]

Orders of the Day — Liverpool (Regeneration)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Pope.]

Mrs. Louise Ellman: Liverpool's urban renaissance is under way. It is seen most clearly in the city centre, which has been identified in the north-west economic strategy as the engine of growth for both city and region. That is despite the shadow cast by the speculating and exploitative Walton group plc, which has stifled regeneration by acquiring key city centre sites, securing public sector grant, yet failing to develop.
The Walton group stands guilty of impeding commercial growth, blighting the old post office site, Exchange Flags and now, in bizarre and unacceptable circumstances, Chavasse park, leaving Liverpool without a flagship millennium project and costing the city more than £200 million of committed investment, which has now been withdrawn.
I thank the Minister for authorising an inquiry into the group's questionable acquisition of £4.5 million of public money, paid between 1992 and 1994 to regenerate Exchange Flags. At the end of 1999, that building remains largely empty. The group is increasing its wealth through capital appreciation of its undeveloped properties, while Liverpool has been sold short. The group's activities are against the public interest. It has committed a fraud on the city of Liverpool. I ask for an assurance that the inquiry will be thorough and determined.
Regeneration must address economic, social, physical and environmental aspects of urban decline. Much progress has been made in Liverpool. City centre successes include the £90 million Queen's square Neptune development, including one of Liverpool's new four-star hotels, cultural, retail and office facilities; and the imaginative multi-million pound brownfield regeneration in Everton, led by Hope university college, transforming a derelict area into a place of higher and further education opportunities, linked with housing and shopping.
There has been a significant increase in inner-city housing. Since 1991, there has been nearly a 300 per cent. increase in people living in inner-city Liverpool. Regeneration of the Hope street quarter is under way as one of the city's major cultural areas.
Much has been done to realise the economic potential of Liverpool's thriving arts sector. The Government have given a lifeline to the Royal Liverpool Philharmonic Society and to the theatres in Liverpool. Nationally, the arts are the fastest growing sector producing employment.
Examples of new developments in Liverpool include the imaginative FACT—Foundation for Arts and Cultural Technology—media enterprise project; ACME—Arts, Culture, Media Enterprises—investment; and the Centre for Arts Development Training.
The trail-blazing Merseyside special investment fund has invested more than £65 million of European and private funding in 4,000 Merseyside jobs. It is hailed as a national and European example of good practice.
Liverpool's expanding universities provide educational opportunities, together with an economic spin-off, for example, through technology transfer. The CIMS—Centre

of Intelligence Monitoring Systems—project at the university of Liverpool is spinning out technology into new and exciting projects. For example, new means of monitoring premature babies are being used at Liverpool Women's hospital.
Major waterfront development in Liverpool is bringing hotels, housing and tourism and the growing trade in the port of Liverpool brings jobs. The north-west and Irish trade group is identifying investment opportunities for business with Northern Ireland and the Republic of Ireland. The Government's new deal for communities has started its work in Kensington and Smithdown.
All those initiatives rest on the imaginative use of funding attracted from a wide variety of sources, but the focus needed to effect major and visible change in Liverpool city centre is absent. That is why I welcome Liverpool Vision, which is the first urban regeneration company in the country to be set up following Lord Rogers' report, "Towards an Urban Renaissance". It brings together the North-West development agency, Liverpool city council, English Partnerships and the private sector to produce strategy and design for the city centre. International competition has produced a shortlist to conduct the design. Public consultation will follow.
I call on Liverpool Vision, its partners and the local community to show that they can act decisively and collectively. The Government must consider whether additional powers are necessary to bring about the swift action that is needed. I urge Liverpool Vision to use imagination and determination to secure a prosperous city centre, which, with its internationally renowned waterfront and fine architecture, will be the pride of country and continent.
Liverpool's economy is improving. Unemployment in my constituency has reduced by more than 26 per cent. in two years, but there are still more than 5,000 people out of work. Liverpool still ranks number one in the national index of local deprivation. The recent CACI report found that nine of the 20 poorest postcodes in the country were to be found in Liverpool.
What is the way forward? It is for local knowledge, commitment and determination to ensure that European, national, regional and local initiatives support all people in Liverpool, including all its ethnic and racial groups, and that those initiatives attract private investment. Examples of good practice, such as the community-led Eldonian co-operative housing, leisure, employment and environmental regeneration in Vauxhall, should be replicated. The North-West development agency must keep Liverpool as its priority, backing local partners. The local authority must show initiative and leadership. Strategies must be turned into action.
I should like an assurance that the Government will co-operate in identifying matching funding to enable the £840 million second phase of European objective 1 funding for Merseyside to be fully utilised as additional spending. I call on the Government to review regulations that impede the most effective co-ordinated use of funds from the diverse sources available.
There is much more to achieve. Major companies must remain in the city centre and others should be encouraged to join them. Small and medium-sized enterprises and microbusinesses must be backed. I welcome the proposed new regional and local enterprise funds. The new deal must be used imaginatively. It has already brought great


benefit to Liverpool and it should be used together with funds for small businesses, training, retraining and skilling to bring new opportunities to all the people of Liverpool. Intermediate labour market schemes must be supported. Education, training and retraining must be accessible. Local people must have the opportunity to take jobs in Liverpool. Universities, which are already making a great contribution to the city, must promote the information society and back the local economy, spinning out more of their knowledge and expertise for the people of Liverpool.
All housing tenures should be encouraged, particularly as part of regeneration schemes looking at environment and employment at the same time as housing provision. The proposed cuts by the Housing Corporation because of the new formula being applied must be reconsidered. Cuts in Housing Corporation funding of around 13 per cent. for Merseyside are simply unacceptable at a time when we are trying to support and encourage the regeneration of the inner city.
The Daresbury laboratory must continue to benefit Liverpool and the north-west with its fine research capacity. Integrated infrastructure investment in air, rail, sea and road must be increased. Regeneration cannot take place simply in the place where it is being experienced. Wider investment is necessary, too. Urban spaces and parks must be valued, and investors in Liverpool must continue to be welcomed.
I call on Liverpool Vision to take up the challenge of restoring Chavasse park as a flagship project and to address the blight left elsewhere in Liverpool by the Walton group's dereliction of duty. It is not good enough for Liverpool city council simply to wring its hands because of problems that may well have been created by others.
As things stand, Liverpool will be one of perhaps only two cities in the country not to have a flagship millennium project within its precincts. That is simply not acceptable. If the millennium project has collapsed mainly because of the Walton group, and because of the bizarre circumstances surrounding it—and possibly also because of inaction by Liverpool city council—it must be up to Liverpool city council, together with Liverpool Vision, to restore what has been lost and to find new ways forward.
Lord Rogers, in his urban task force report, concludes:
If we are to succeed in creating an urban renaissance we have to change the image of urban areas to one of attractiveness, opportunity and growth".
Liverpool is already changing both image and reality. We must all rise to the challenge of making Liverpool the prime city of the future.

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Beverley Hughes): I congratulate my hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman) on securing this debate about the regeneration of a very important city in the UK. I recognise also her long experience in working to secure regeneration through local government, and her hard work since becoming a Member of Parliament to help Liverpool get back to where it ought to be—one of our foremost cities.
My hon. Friend has outlined some of the ways in which we can begin to see the seeds of change. There has been much progress in Liverpool city centre recently.
Liverpool Vision—to which my hon. Friend referred—is the first urban regeneration company, and is building on that progress. The city centre is the prime location of high-quality jobs, business and tourism.
My hon. Friend is right to say that Liverpool Vision must ensure that the wonderful potential of the sites and historic buildings of Liverpool can make the city a place for the new millennium—more jobs, more homes and more places to visit. That means improving accessibility, and the public realm, and adding value to what is already there.
If we are to achieve sustainable growth in those areas, we must involve people and communities, and build real partnerships that draw on the strength and experience of everybody. It will be important for Liverpool Vision to produce a top-quality bid in single regeneration budget round 6, which embodies the principles of sustainability and social inclusion.
We have noted that the North-West development agency has produced its strategy for the region, and that strategy recognises the regeneration of Liverpool city centre as an early priority. The agency is a founding member of Liverpool Vision and is working closely with all the partners to bring forward a strategy to help Liverpool become a world-class city. The agency believes that concentrating on the city centre is crucial to changing the economic prospects for the city as a whole. Many of the proposals likely to emerge from Liverpool Vision will require resources from the agency over the next 10 or even 15 years.
There has been much movement in the city council, with a new chief executive with an excellent track record of achieving change. Sweeping changes are taking place in the council's management, with clear portfolios of responsibility, a new Cabinet-style structure and a smaller management team. I wish David Henshaw well in his new role and assure him of our continued support.
The Liverpool democracy commission has tapped into, and revealed, tremendous popular concern about the kind of local government that the city needs for its future and has made some radical and exciting proposals, including a directly elected mayor. Many winds of change are blowing and things are beginning to happen that bode well.
My hon. Friend rightly raised the issue of the Walton group and the Exchange Flags project. The Walton Commercial Group Ltd, was awarded a grant of £4.5 million in July 1992 towards the refurbishment of the Exchange Flags building in the city centre. It was to provide 400,000 sq ft of refurbished office space and a museum. Total grant payments of nearly £4.5 million were made between November 1992 and May 1994, against claimed qualifying expenditure of more than £27 million. The situation regarding the project's realisation is much as she described.
The Government are taking the issues extremely seriously. English Partnerships, acting as agents for the Secretary of State, is reviewing the project and the use to which the grant has been put. English Partnerships has given notice of its intention to exercise its right under the terms of the agreement to enter the premises and carry out an inspection of the works and of the relevant books and records of the Walton group. I assure my hon. Friend that the Government will ensure that a thorough and determined approach is taken to investigating all those matters involving the Walton group.
I stress that the Government are trying to help regeneration in Liverpool across the board, through a variety of mainstream programmes as well as specific regeneration initiatives. That includes health, education and housing.
Liverpool has been chosen to have two new education action zones, in Dingle, in Granby and Toxteth and in Speke-Garston. Both will begin work next spring. That is an important success for Liverpool. More than 120 applications to run zones were received in round 2 and only 48 were shortlisted for further development.
As part of "Excellence in Cities", two new beacon schools for Liverpool were announced by my right hon. Friends the Prime Minister and the Secretary of State for Education and Employment on 23 November: the King David high school and St. Malachy's primary school. They are among the best-performing schools in the country and are examples of successful practice that are being brought to the attention of others with a view to sharing that practice. City learning centres will provide state-of-the-art information and communication technology-based learning opportunities for pupils, teachers and the wider community and will be based in the inner city.
Merseyside has a strong health action zone comprising the local and health authorities across Merseyside. It is the largest HAZ in England and has been allocated £13.7 million over the next three years. It has been operational only since May but several projects are already under way. It is concentrating on developing the strongest possible partnerships with delivery agencies in a well-focused attack on health inequalities. The first mid-year review, conducted in October, was well received and the mood was upbeat.
The work to find housing solutions for the inner core of Liverpool is crucial but we must have a strategy linking into Liverpool Vision's across-the-board work. Liverpool has already done excellent work on homelessness, refugees and asylum seekers, anti-social behaviour and supported housing. I am aware of the concerns of my hon. Friend the Member for Riverside about an 11 per cent. reduction in housing provision for Merseyside from the Housing Corporation as a result of changes in the way the figures are calculated. However, that figure needs to be read alongside the housing investment programme for Merseyside. We will make some important announcements on the housing investment programme shortly, and I ask that my hon. Friend waits for those announcements before making her judgments on the matter.
We need to know much more about demand for housing in Liverpool, because otherwise we are fighting in the dark. I am glad to say that Liverpool has engaged the university of Birmingham to undertake a full assessment of the housing demand picture. It has also commissioned land surveys by Grimleys. It is too early to judge the outcome of the surveys but, so far, the city council has stuck to the task and put resources behind it.
In addition to those mainstream initiatives that have benefited Liverpool, there has also been the single regeneration budget. Round 5 is the latest, and Liverpool city centre secured £475,000 in total. Liverpool Vision has been asked to submit a comprehensive bid for round

6 of the SRB in the context of a strategic regeneration plan for the city. The round 5 proposal, which was supported, is a preparatory move for the round 6 bid. The round 5 proposals can shape the round 6 bid, especially in terms of developing genuine community capacity building and testing innovative approaches to regeneration. The bidding guidance for round 6 will be published next month. We are looking for Liverpool Vision to put in a really good proposal for Liverpool in that round.
In addition, the round 5 scheme for Speke-Garston—a total of £10 million, with an SRB contribution of more than £4 million—will build on the jobs and other benefits of the round 1 schemes in Speke-Garston. The development company there has been a major player in attracting investment, such as the Jaguar X400 investment in Halewood, which has also attracted other companies to the area.
My hon. Friend the Member for Riverside raised the issue of European objective 1 funding for Merseyside for 2000–06, and we are pleased that Merseyside achieved objective 1 status. However, it has never been the case that the Government have had to make matched funding available for objective 1 European funds. It is not correct to state that the Government have to match objective 1 EU funding for £844 million for Merseyside on a pound-for-pound basis in order receive that funding. My hon. Friend will know from her previous experience that objective 1 funds from the EU can be used to fund up to 75 per cent. of regeneration schemes, with applicants having to find the rest from UK sources, either public or private.
For the previous Merseyside programme, the regeneration partners thought that they could find pound-for-pound matched funds for European objective 1 funds. However, some regeneration scheme applications found it difficult to locate the funding on that basis. The Government are trying to maximise the grant rate from European funding to reduce the matching funding that needs to be found here and also to ensure that the maximum amount of European funding is drawn down, so that the maximum number of projects can be funded. That approach will also free up Government funding for other regeneration schemes in the area. We are not at odds with the spirit of what my hon. Friend the Member for Riverside is trying to achieve, but the position is not as simple as she seemed to suggest when one tries to ensure the maximum resources from all possible sources end up in Liverpool supporting regeneration projects.
The economic revival of Liverpool is there for us to begin to see. The transformation of Merseyside includes the complete refurbishment of the Albert dock area, where a media cluster has begun to develop. Planet Wild is an independent television production company that has received three Royal Television Society awards since it was established 18 months ago. A company called Amaze, situated in the Port of Liverpool building, is a world-class designer of software, websites and expandable movies—I am not sure what they are, but they sound interesting—and is a leader in computer-mediated communication.
The transformation of a 64-acre former railway marshalling yard into the Wavertree technology park is further clear evidence of Merseyside's determination to play a major part in the new, technology driven economy. Equally, several automotive companies are locating,


or will be doing so, in the Speke-Garston-Halewood area, and the Speke-Garston development company has been a major player in attracting that investment.
I mentioned the Jaguar initiative earlier, and other companies—including Lear, Conix and Johnson Controls—have also brought investment to the Halewood area. That has linked parts of Liverpool such as the Speke-Garston area to areas of need, and thus represents a real opportunity for the city.
We have heard tonight about the progress already being made in Liverpool. The process of regeneration has already begun. Partnerships between local communities and the business and voluntary sectors are building a foundation for change and growth, along with local and regional government, and central Government. Government initiatives such as the single regeneration budget demonstrate what can be achieved through working together. We recognise the importance of involving local people in finding solutions to Liverpool's problems, and of giving the people of the city a greater stake in the success of its development and its future.
I hope that we have learned a critical lesson from Liverpool's long history. The change being brought about cannot be sustained unless people are properly involved and have ownership of it. We must build people into the programme of change, from the outset and from the bottom up.
The Government, and other bodies, are trying to take a holistic approach to Liverpool's regeneration, by combining health, economic and environmental initiatives

with lasting benefits for the community. I have great hopes for Liverpool Vision, our first urban regeneration company. I am sure that it will benefit the city and demonstrate the value of such companies, of which I believe that there will be more. I am also sure that the North-West regional development agency will be important in implementing economic and social change in the area.
A great deal of work remains to be done, as my hon. Friend the Member for Riverside will know. However, we are putting in place a framework that I hope will provide opportunities to raise the quality of life in Liverpool for all those who work there.
My hon. Friend knows Liverpool very well. I hope that she will agree that Liverpool now has something that it has needed for perhaps 25 years—a constellation of people, business, local governance and local organisations working together and pulling in the same direction.
In the past, Liverpool has been dogged by the lack of a consensus about what needs to be done and how to go about doing it, and its people have suffered as a result. Matters are different now, and people are willing to pull in the same direction. The work done by my hon. Friend and her colleagues in that regard has been very important. I wish Liverpool well, and assure her that the Government want the city to succeed as it ought to.

Question put and agreed to.

Adjourned accordingly at sixteen minutes to Eleven o'clock.